Ruffer InvestmentCompany Limited

Annual report

for the year ended

30 June 2021

Key performance indicators 3

Financial highlights 3

Chairman’s statement 5

Business model and strategy 12

Investment Manager’s report 19

Responsible investment report 32

Top ten holdings 39

Directors 40

Report of the Directors 42

Corporate governance statement 48

Directors’ remuneration report 60

Audit and Risk Committee report 62

Management Engagement Committee report 68

Report of the depositary 70

Independent Auditor’s report to the members of the Company 72

Statement of financial position 82

Statement of comprehensive income 83

Statement of changes in equity 84

Statement of cash flows 85

Notes to the Financial Statements 86

Portfolio statement 120

General information 124

Management and administration 126

Appendix (unaudited) 127

Contents

2

Key performance indicators

30 June 21 % 30 June 20 %

Share price total return over 12 months1 19.5 12.4

NAV total return per share over 12 months1 15.3 10.1

Premium/(discount) of share price to NAV 2.0 (1.5)

Dividends per share over 12 months2 1.90p 1.85p

Annualised dividend yield3 0.7 0.8

Annualised total return per share since launch1 7.9 7.4

Ongoing charges ratio4 1.08 1.08

Financial highlights

30 June 21 30 June 20

Share price 287.00p 242.00p

NAV at year end as calculated on an IFRS basis5 £575,851,333 £444,112,381

NAV at year end as reported to the LSE £575,913,008 £444,389,282

Market capitalisation6 £587,541,854 £437,507,967

Number of shares in issue 204,718,416 180,788,416

NAV per share at year end as calculated on an IFRS basis5 281.29p 245.65p

NAV per share at year end as reported to the LSE 281.32p 245.81p

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1 Assumes reinvestment of dividends. See appendix for Alternative Performance Measures (APMs)

2 Dividends declared during the year

3 Annual dividend yield is calculated using share price at the year end and dividends declared during the year

4 See note 9

5 This is the NAV/NAV per share as per the Financial Statements. Refer to note 14 on pages [• to •] for a reconciliation between this figure and the NAV/NAV per

share as reported to the LSE. See appendix for Alternative Performance Measures (APMs)

6 See appendix for Alternative Performance Measures (APMs)

Source: RAIFM Ltd, FTSE International (FTSE). Data to 30 June 2021. All figures include reinvested income. Ruffer performance is shown after deduction of all fees and

management charges. Performance data is included in the appendix.

80

120

160

200

240

280

320

360

2004 2006 2008 2010 2012 2014 2016 2018 2020

RIC total return NAV FTSE All-Share TR Twice Bank Rate

4

This has been another excellent year for your company. The net asset value (NAV) total return7 of

the Ruffer Investment Company Limited (RICL or ‘the Company’) over the year to 30 June 2021

was 15.3%, the NAV per share7 rising from 245.65p to 281.29p. The share price total return7 was

19.5%. The NAV return was augmented by the share price moving from a discount to NAV7

of -1.5% to a premium7 of +2.0% over the period. The compound annualised NAV total return7 to

30 June 2021 since the Company’s launch in July 2004 was 7.9%.

The nominal annual return is not the only important performance metric. A given return with little

volatility will grow more wealth over time than the same average return with greater volatility.

Furthermore, a relatively low correlation between RICL and other asset returns helps reduce the

volatility of a portfolio which contains RICL shares. And whereas an equity/bond combination has

traditionally been a low risk approach to achieving the same outcome, that strategy is now

potentially high risk because future returns from bonds and equities are likely to move together

when interest rates rise as Central Banks begin to tighten monetary policy.

The chart below shows the annual total return and volatility of the Company’s NAV since launch

against: (a) the Company’s objective; (b) the FTSE All Share Index and (c) four of the most

comparable investment companies within the AIC Flexible Investment sector, which Kepler, a

company which analyses funds, refers to as ‘protective diversifiers’.

NAV total return7 versus volatility, July 2004 – 30 June 2021

Source: Ruffer, Morningstar. Constituents: Personal Assets, Capital Gearing, Aberdeen Diversified Income & Growth, RIT Capital Partners

Ruffer Investment Company

Twice Bank Rate

FTSE All-Share

0

2

4

6

8

10

0 2 4 6 8 10 12 14 16 18 20

NAV TR (ann)

Volatility (ann)

Chairman’s statement

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7 See appendix for Alternative Performance Measures (APMs)

The RICL return has continued to provide the highest return per unit of risk of all the comparators.

Relative to a risk-free investment, the return has been approximately twice that of the FTSE All-

Share Index since the launch of RICL. In terms of the Sortino Ratio, which only measures the

downside element of volatility, the Company has generated nearly three times more excess return

per unit of risk than an investment in the UK stock market.

To 30 June 21 Sharpe ratio Sortino ratio

Ruffer Investment Company since inception (July 2004) 0.93 2.09

FTSE All-Share Total Return Index since July 2004 0.47 0.75

Portfolio management

My statement in the interim report focused on the ‘what’ and the ‘why’ of the Company’s long-term

investment objective to provide a total return of twice Bank Rate. However, there was little on how

that objective is achieved, other than alluding to an ‘all-weather portfolio’ which, in the words of

Jonathan Ruffer, is ‘trying not to be wrong rather than attempting to be right’.

‘All-weather’ implies quite a wardrobe of different assets. The RICL investment strategy is different

from the conventional protection of an equity/bond split offering economic cycle exposure to

growth as well as protection against deflation.

The RICL portfolio combines some unusual assets to manage exposures. Nicolas Taleb coined the

word ‘antifragile’ to express a concept which goes beyond simply resilience or robustness to an

adverse influence. Fragility suffers from shock. Resilience resists shock and stays the same but

antifragility implies gain from adversity.

Ruffer AIFM Limited (RAIFM or ‘the Investment Manager’) uses antifragile assets as part of the

all-weather wardrobe by building portfolios which benefit from unexpected events. Fragile assets

are combined with a protection strategy which, as Taleb would say, does not try to predict risks but

to mitigate against them. RICL achieves this by using financial assets explicitly designed to benefit

from market volatility, thereby offsetting fragility.

Real assets

RICL’s stated investment objective of a return of twice Bank Rate would have provided a low

volatility return over the long run, but in at least one third of the last 120 years cash produced a

negative real return, and in eight of those years it lost more than 10% after inflation. Concern over

inflation explains the high proportion of the RICL portfolio invested in real assets such as index-

linked bonds and gold-related securities.

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During the year, RICL briefly added an exposure to cryptocurrency to its armoury of real assets

that have the potential to hold their value while fiat currencies are being devalued. Having followed

and analysed bitcoin in depth and for an extended period, the Investment Manager viewed the

cryptocurrency in November 2020 as an emerging store of value with an attractive risk/return

profile. The price subsequently discounted the surge in excess liquidity which appeared to be

peaking in April 2021 and the position was sold, having contributed 515 basis points to RICL’s total

return in the financial year.

More than thirty years before bitcoin was created, Frederick von Hayek, who received a Nobel

prize in 1974 for his work on the theory of money, argued the case against government monopoly

of money. In a paper published by the Institute of Economic Affairs in 1976 entitled ‘the

Denationalisation of Money’, he suggested there is no need for a very sharp distinction between

what is and what is not money, nor for a definition which assumes the medieval conception that all

money, or the value of money, must necessarily be a creation of the state.

Government-issued currency has a long history of depreciation of value in relation to goods and

services. Hayek cites Diogenes, the 4th century BC cynic, who called money the politician’s game of

dice. The concept of legal tender was questioned in cases fought in the US Supreme Court after the

American Civil War, and in the German courts after the First World War, when debts were

enforced which were repaid in Marks worth a 15,000th part of their original value.

Who in the UK today would sensibly exchange one gold sovereign, which in 1913 would buy a suit,

for a one pound coin, which is the same in legal tender but which would now buy less than one litre

of milk? Since the US Federal Reserve was created in 1913, the US dollar has depreciated, in terms

of US consumer prices, by 96%.

Bitcoin may fall in value for other reasons, but as an asset sitting outside the fiat money system it is

an intriguing prospect as a digital version of gold. Importantly this is completely different to

Central Bank Digitised Currencies (CBDC), which are nothing more than a digital version of their

fiat cousins and are in no way protected from a similar debasement.

Hayek’s message was that value is a relationship which only has meaning when the quantity of one

object is measured in terms of another and the freedom of the individual is best protected by

constitutions which prohibit restrictions on transaction in any kind of money or precious metals.

He said ‘there could be no more effective check against the abuse of money by governments than if

people were free to refuse any money they distrusted and to prefer money in which they had

confidence’.

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This is the backdrop against which the Company has taken significant positions in real assets. In

the last six months the threat of inflation has taken centre stage amongst the commentariat and

investment community and the Company is positioned to protect investors against what may prove

to be a generational event in terms of wealth distribution.

Share buy-backs and issuance

While there have been no share buy-backs during the year, a case was made, in my Chairman’s

statement in the interim report, for share buy-backs where discounts of the share price to NAV per

share were perceived to be excessive and temporary. While discounts to NAV can offer opportunity

for arbitrage for potential investors, current shareholders benefit from buy-backs which can add

both to NAV per share and market liquidity. Accordingly, the Company is again seeking authority

in the forthcoming Annual General Meeting to buy back up to 14.99% of the Company’s issued

share capital.

At the AGM in December 2020, the Company also sought and obtained authority to issue up to

10% of the Company’s issued share capital on a non-pre-emptive basis. In April 2021, the

Company issued a circular to extend that permission for a further 19,546,841 shares and this was

supported by 98.95% of the votes cast at an EGM in May 2021. Following a second circular, at an

EGM in September 2021, 92.96% of votes cast authorised the issuance of another 21,684,841

shares. The shareholder authority for both of these permissions is effective until the AGM in

December 2021, when the Company will again seek renewal. Share issuance is, however, separately

subject to Prospectus Rules. These rules limit to 20% the aggregate number of shares issued by tap

over the preceding twelve months without the Company publishing a prospectus. Consequently,

the Board is now planning to issue a prospectus to reset the 20% capacity afforded by the

Prospectus Rules, and (subject to shareholder approval) will take the opportunity at the same time

to offer new shares to both existing and future investors. We want to ensure that such an offer is

accessible to both institutional and retail shareholders.

The case was made for share issuance at a premium, including costs, through share sale, or from

treasury, on a non pre-emptive basis on the following grounds

– to meet ongoing demand in the market in order to provide effective management of the

premium to NAV per share at which the shares may trade so as to ensure that long-term

investors who regularly acquire shares are not disadvantaged

– increase the size of the Company, thereby spreading operating costs over a larger capital base

which should reduce the ongoing charges ratio

– enhancement of the NAV per share

– improvement of liquidity in the market for the shares.8

These shares were issued gradually in the second half of the year to meet a market demand which

was driving a premium of share price to NAV per share. In the year ended 30 June 2021, the

Company issued 23,930,000 shares (13.2% of 30 June 2020 share capital) for a total net

consideration of £67.4 million, which contributed 1.1p to NAV per share. Combined with the

appreciation of the share price, the market capitalisation of RICL therefore rose from £437.5

million to £587.5 million during the year. Subsequent to the year end, the Company issued a

further 14,695,000 shares for a total net consideration of £41.9 million. Whilst size is not an

objective in itself, the enhanced marketability of RICL shares potentially enhances the

attractiveness of the Company to shareholders.

Earnings and dividends

During the year the Company generated 3.30p per share of revenue and 33.13p per share of capital

gain. The Company has always invested for total return which gives flexibility to the Investment

Manager to pursue the optimal investment strategy for the long-term generation of return and

preservation of capital.

In order for the Company to remain able to be marketed to a UK retail client base, it must

distribute at least 85% of revenue earned in any given year. Having paid out an interim dividend in

March 2021 amounting to 0.95p per share, the Company has declared a second interim dividend

for this year of 1.55 pence per share, of which 0.7 pence relates to a one-off special dividend

received from one of the Company’s investments. The remaining balance of revenue earned has

been retained to add to the revenue reserve which may be used to help protect dividends against

future fluctuations in revenue.

Responsible investing

The Annual Report includes a comprehensive section on how environmental, social and

governance (ESG) considerations are embedded in the Ruffer investment process. The Investment

Manager recognises that ESG factors are a source of both opportunity and risk at the macro- and

micro-economic level. RICL seeks to be a responsible steward of its shareholders’ assets and this is

set out in the Responsible Investment report.

Among other things, Ruffer is a signatory to the UN Principles for Responsible Investment (PRI),

to Climate Action 100+, to the Transition Pathway Initiative and the Institutional Investors Group

on Climate Change (IIGCC). During the year, the Investment Manager has continued the good

work achieved in its equity holdings – engaging with companies and advocating for change where

appropriate. It has also developed a proprietary sustainability rating model for government debt

and is actively researching alternative assets with potential to protect or benefit portfolios in the

future.

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The Board and the Investment Manager are mindful that ESG considerations continue to emerge,

that this area is a marathon and not a sprint, and that the considerations are broad in nature,

affecting such areas as public policy, taxation, consumer preferences as well as the impact on

specific entities and areas of investment.

Board composition

The Company saw Ashe Windham retire at the AGM in December 2020 after nine successful years

as Chairman. This followed the retirement in June 2020 of John Baldwin and the appointment of

Shelagh Mason and, on 1 September 2020, Nick Pink. On my appointment as Chairman, Jill May

became Senior Independent Director.

While Shelagh has been able to join the other Guernsey Board members in physical meetings, Nick

has yet to be able to do so due to Guernsey covid-19 travel restrictions. That said, it is indicative of

developments in technology that Nick and Jill have been able to contribute positively through

Zoom and other media and we can now look forward, when travel constraints are lifted, to physical

meetings. Not least of these is the annual day of information meetings in London between the

Board and Ruffer executives. This day allows the Board to meet all the teams which contribute to

RICL’s portfolio in such areas as ESG, risk, investment and business strategy, specialist

investment, counter-party and sub-custody analysis or cyber security. It is the opportunity for the

Board to deep-dive in to areas of particular Board focus.

Towards the end of the year, we commissioned an external evaluation of the Board, the Chairman

and the Investment Manager. The rankings given by each Director to questions in the survey were

useful in as much as they identified above average assessments which needed to be sustained and

below average which needed attention. The results of the Board evaluation are discussed further in

the corporate governance statement on page 54.

Communication with shareholders

The Investment Manager communicates regularly with shareholders on the investment thinking

which drives RICL performance. There has been an increased volume of digital connection with

current and potential shareholders through website thought pieces, monthly fact sheets, Ruffer

radio, shareholder webinars and other media communication.

Given the constraints on public gatherings created by the covid-19 pandemic, and the UK

government’s plan to permit virtual general meetings, the interim statement mentioned that the

Board and Investment Manager were considering how to open the AGM virtually to all

shareholders who have internet access. Enabling either a full virtual or hybrid Zoom AGM needs a

change to the Articles and this is proposed in the resolutions for the forthcoming AGM.

10

Zoom AGMs have had a mixed reception so far with other investment companies. In many cases

there has been limited if any attendance and in all cases at significant extra cost to all

shareholders. If the resolution to change the Articles is passed, we will canvas shareholders for

their views before pressing the virtual button.

The future

Inflation is centre stage of debate. Many seem to have ignored the fact that inflation has been

devaluing their net worth for years. In the last ten years alone, since December 2010, a pound has

lost some 25% of its value in retail price terms, and 43% since December 2000. An investor who

bought a FTSE 100 ETF in 2000, thinking to protect wealth by investment in the UK’s 100 largest

listed companies, will have since lost nearly half that capital in real terms.

The current inflation debate seems to have focused more on the likely rate of change in consumer

prices than in asset prices, commodities, energy, metals and food or the extent to which price

increases may already be embedded in expectations. The Investment Manager’s report shows that

the percentage of businesses in the US raising prices is at a 35-year high and that global data

indicate a similar picture. As long as Central Banks can continue to contain market expectations on

interest rates, inflation will continue to be politically the cheapest form of taxation.

Hayek wrote in 1940: ‘it has never been denied that employment can be rapidly increased, and a

position of full employment achieved in the shortest possible time, by means of monetary

expansion. All that has been contended is that the kind of full employment created in this way is

inherently unstable and perpetuates fluctuations’. Post-war economic history seems to prove his

point and as a Spanish philosopher once said, if we cannot learn from history we are condemned to

repeat it.

Analysis in the Investment Manager’s report shows the asymmetry of risk in bonds arising from a

sustained inflationary scenario which, as they say, implies ‘heads you don’t win much, tails you

lose a lot’. It also shows the likely impact on other assets, including the risk premium on certain

equities, of un-anticipated inflation. The Board is comfortable with the Investment Manager’s high

level of conviction in the longer-term inflationary end-game, even if the mid-game moves and

timings are uncertain, and it is confident that the RICL portfolio adequately combines recognition

of the high-conviction scenario with a level of protection against unpredictable outcomes.

Christopher Russell

5 October 2021

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The Company carries on business as a closed-ended investment company. Its shares are traded on

the Main Market of the London Stock Exchange (LSE) and it was admitted to the premium

segment of the Official List of the UK Listing Authority on 20 December 2005. The Company is

externally managed by Ruffer AIFM Limited, a UK investment manager authorised and regulated

in the conduct of investment business in the United Kingdom by the Financial Conduct Authority

(FCA). Ruffer AIFM Limited is also the Alternative Investment Fund Manager (AIFM) of the

Company.

Board

The Board of Directors is responsible for the overall stewardship of the Company, including

general management, structure, finance, corporate governance, marketing, risk management,

compliance, gearing, contracts and performance. Biographical details of the Directors, all of whom

are non-executive, are listed on pages 40 and 41 and on the Management and Administration

summary on page 126. The Company has no executive directors or employees.

The Board has contractually delegated to external parties various functions as disclosed in the

Corporate Governance Statement on pages 48 to 59.

Investment objective

The principal objective of the Company is to achieve a positive total annual return, after all

expenses, of at least twice the Bank of England Bank Rate.

The Bank of England rate throughout the year ended 30 June 2021 was 0.10%.

The Company predominantly invests in internationally listed or quoted equities or equity related

securities (including convertibles) or bonds which are issued by corporate issuers, supra-nationals

or government organisations.

Investment strategy

The Company’s strategy is to create a balanced portfolio of offsetting assets which in aggregate are

intended to enable the Company to meet its investment objective. The aspiration remains to

produce consistent positive returns, regardless of the performance of financial markets. Over

shorter periods this is likely to result in the Company lagging sharply-rising equity markets, but

outperforming falling equity markets. This strategy will be implemented predominantly through

investments in listed securities, collective investment schemes and currencies but the Investment

Manager has the flexibility to use other asset classes should it be necessary to do so.

Business model and strategy

12

The investment strategy has been tested in the last 12 months as conditions in markets have

changed quickly, but the portfolio has stood up to this test. In order to achieve the Company’s

investment objective we need to be able to perform in both rising and falling asset markets. This

means that we maintain a balance of investments with a small but potent book of cyclical equities

to perform should economic and financial conditions continue to improve, index-linked bonds and

gold to benefit from sustained higher inflation and financial repression, and credit protection and

options to protect the Company should there be a shock to financial markets.

Investment policy

In selecting investments, the Company adopts a stock picking approach and does not adopt any

investment weightings by reference to any benchmark. Both the Board and the Investment

Manager believe that the adoption of any index related investment style would inhibit the ability of

the Company to deliver its objective.

The Company invests across a broad range of assets, geographies and sectors to achieve its

objective. This allocation will change over time to reflect the risks and opportunities identified by

the Investment Manager across global financial markets, with an underlying focus on capital

preservation. The allocation of the portfolio between different asset classes will vary from time to

time so as to enable the Company to achieve its objective. There are no restrictions on the

geographical or sectoral exposure of the portfolio (except those restrictions noted below).

The universe of equity, equity related securities or bonds in which the Company may invest is wide

and may include companies domiciled in, and bonds issued by entities based in, non-European

countries, including countries that are classed as emerging or developing. This may result in a

significant exposure to currencies other than pound sterling. Where appropriate, the Investment

Manager will also use in-house funds to gain exposure to certain asset classes.

The Company may use derivatives, including (but not limited to) futures, options, swap

agreements, structured products, warrants and forward currency contracts, for efficient portfolio

management purposes only.

Investment restrictions and guidelines

It is not intended for the Company to have any structural gearing. The Company has the ability to

borrow up to 30% of the NAV at any time for short term or temporary purposes, as may be

necessary for settlement of transactions, to facilitate share redemption or to meet ongoing

expenses.

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The proportion of the portfolio invested into companies based in emerging or developing countries

will be limited, at the time of any investment, to below 15% of the Company’s gross assets.

The Directors have determined that the Company will not engage in currency hedging except

where the Investment Manager considers such hedging to be in the interests of efficient portfolio

management.

The Directors have determined that no more than 15% in aggregate of the Company’s gross assets

at the time of acquisition will be invested in listed investment companies (including investment

trusts), with a maximum of 10% of gross assets invested in investment companies not having

stated investment policies allowing them to invest no more than 15% of their own gross assets in

other UK listed investment companies (including investment trusts).

General

In accordance with the requirements of the United Kingdom Financial Conduct Authority (FCA),

any material changes in the Investment Policies and Objectives of the Company may only be made

with the approval of shareholders.

Investment of assets

At each quarterly Board meeting, the Board receives a detailed presentation from the Company’s

Investment Manager which includes a review of investment performance, recent portfolio activity

and a market outlook. It also considers compliance with the investment policy and other

investment restrictions during the reporting year. The Company’s Top Ten holdings and Portfolio

Statement are on page 39 and pages 120 to 123 respectively.

Environmental policy

Whilst the Company has a limited carbon footprint in respect of its day to day activities, the Board

notes that the Investment Manager recognises that environmental responsibility is core to its

longer term business success, and actively integrates environmental, social and corporate

governance (ESG) issues into its investment process. The Investment Manager’s ESG policy

is available upon request. For more detail, please see the Responsible investment report on

pages 32 to 38.

A number of environmental initiatives have been introduced by the Board and the Administrator,

as follows –

– minimising printing of Board materials

– deemed consent from shareholders to accept electronic copies of documents

– use of recycled paper for Annual and Interim Reports for shareholders requiring hard copies

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– use of recycled Woodland Trust printer paper by the Administrator, which funds new UK

woodland and

– Fairtrade tea and coffee and tap water, rather than bottled water, served at all Board meetings.

In addition, the Board intends to carbon balance Directors’ and Investment Manager’s flights upon

resumption of business travel.

Shareholder value

The Board reviews on an ongoing basis the performance of the Investment Manager and considers

whether the investment strategy utilised is likely to achieve the Company’s investment objective of

realising a positive total annual return, after all expenses, of at least twice the return of the Bank of

England Bank Rate. Having considered the portfolio performance and investment strategy, the

Board has unanimously agreed that the interests of the shareholders as a whole are best served by

the continuing appointment of the Investment Manager on the terms agreed.

Dividend policy

The Board’s policy is to pay dividends semi-annually, which are typically declared in September

and March, with an objective of distributing a minimum of 85% of the Company’s net revenue each

year.

Dividends will only be paid from the Company’s revenue account and not from capital. Dividend

payments by the Company will depend on the net income stream generated by the underlying

investments in the Company’s investment portfolio and therefore no assurance can be given that

dividends will continue to be paid.

The payment of any dividend by the Company is subject to the satisfaction of a solvency test as

required by the Companies (Guernsey) Law, 2008, whereby the Board must be satisfied on

reasonable grounds that the Company will, immediately after payment of any dividend, be able to

pay its debts as they become due and that the value of the Company’s assets would be greater than

the value of its liabilities.

The Board has the discretion to increase or reduce the dividend, or not to declare a dividend, as

appropriate in consideration of the financial position of the Company.

Details of the dividends paid during the year are set out in note 5 to the Financial Statements

on page 93.

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Principal risks and uncertainties and their management

The Board has undertaken a robust assessment of the principal risks facing the Company and has

undertaken a detailed review of the effectiveness of the risk management and internal control

systems. As stated within the Report of the Audit and Risk Committee on page 64, the Board, with

the assistance of the Administrator and the Investment Manager, has drawn up a risk assessment

matrix, which identifies the key risks to the Company. The principal risks and uncertainties faced

by the Company, and the mitigating factors adopted by the Company, are summarised below.

Investment risks – the Company is exposed to the risk that its portfolio fails to perform in line with

the Company’s objectives. The Board reviews reports from the Investment Manager at each

quarterly Board meeting and at other times when expedient, paying particular attention to the

diversification of the portfolio and to the performance and volatility of underlying investments.

Operational risks – the Company is exposed to the risks arising from any failure of systems and

controls in the operations of its service providers, principally the Investment Manager or the

Administrator. The Board receives reports annually from the Investment Manager and

Administrator on their internal controls and reviews pricing reports covering the valuations of

underlying investments at each quarterly Board meeting. The Board can and does receive

explanations and assurances from its key suppliers as to their own operational resilience and plans

and ability to respond during times of crisis, such as at present following covid-19.

Accounting, legal and regulatory risks – the Company is exposed to the risk of action or sanction

by shareholders, counterparties or regulators if it fails to comply with the regulations of the UK

Listing Authority or the Guernsey Financial Services Commission or if it fails to maintain accurate

accounting records. The Administrator provides the Board with regular reports on changes in

regulations and accounting requirements.

Financial risks – the financial risks faced by the Company include market, credit and liquidity risk.

These risks and the controls in place to mitigate them are reviewed at each quarterly Board

meeting. Further details on financial risks are discussed in note 19 of the Financial Statements on

pages 104 to 117.

Emerging risks – the Board is constantly alert to the identification of any new or emerging risks

through the monitoring of the Company’s investment portfolio and by conducting regular reviews

of the Company’s risk assessment matrix. Should an emerging risk be identified the risk

assessment matrix is updated and appropriate mitigating measures and controls will be agreed.

The Board seeks to mitigate and manage these risks through continual review, policy-setting,

enforcement of contractual obligations and monitoring of the Company’s investment portfolio.

16

The Board, Investment Manager and the Company’s Broker also regularly monitor the investment

environment in order to identify any new or emerging risks.

Going concern

The Directors believe that it is appropriate to continue to adopt the going concern basis in

preparing the Financial Statements since the assets of the Company consist mainly of cash and

cash equivalents and securities which are readily realisable. The Directors also note that overall,

due to the nature of the Company’s portfolio, which – as discussed in more detail in the

Performance section of the Chairman’s Review and in the Investment Manager’s report –

comprises both equities and other more defensive assets, it has not been affected significantly in

terms of value or cashflows by the effects of the covid-19 pandemic. Accordingly, in the Directors’

opinion, the Company has adequate financial resources to continue in operational existence for the

foreseeable future. Matters relating to the going concern basis are also discussed in the Long Term

Viability Statement below and note 2(c) on page 86.

Long term viability statement

The Directors have assessed the prospects of the Company over a longer period than the 12 months

minimum required by the ‘going concern’ provision. For the purposes of this statement, having

regard to the economic planning cycle and the Company’s strategy review period, the Board has

adopted a three year viability period.

In its assessment of the Company’s viability over the three year period the Board has considered

each of the Company’s principal risks and emerging risks as detailed above and in particular the

impact of a significant fall in the value of the Company’s investment portfolio.

The Directors consider that a 30% fall in the value of the Company’s portfolio would be significant

but would have little impact on the Company’s ability to continue in operation over the next three

years. In reaching this conclusion, the Directors considered the Company’s expenditure

projections, the fact that the Company currently has no borrowing, but has the ability to borrow up

to 30% of its NAV and that the Company’s investments comprise predominantly readily realisable

securities which can be expected to be sold to meet funding requirements if necessary, assuming

market liquidity continues.

Also, the Board has assumed that the regulatory and fiscal regimes under which the Company

operates will continue in broadly the same form during the viability period. The Board speaks with

its broker and legal advisers on a regular basis to understand issues impacting on the Company’s

regulatory and fiscal structure. The Administrator also monitors changes to regulations and

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advises the Board as necessary. The Board also has access to the Administrator’s compliance

resources as well as the compliance department of the AIFM.

Based on the Company’s processes for monitoring operating costs, share discount, internal

controls, the Investment Manager’s performance in relation to the investment objective, the

portfolio risk profile, liquidity risk and the robust assessment of the principal risks and

uncertainties facing the Company, the Board has concluded that there is a reasonable expectation

that the Company will be able to continue in operation and meet its liabilities as they fall due over

the three year period.

Key performance indicators

The Board uses a number of performance measures to assess the Company’s success in meeting its

objectives. The key performance indicators are disclosed in detail on page 3.

18

Performance review

For the year to 30 June 2021 the Company had a share price return of 19.5% and a NAV return of

15.3%.

The Company has achieved its objective of preserving shareholder capital regardless of the market

conditions. In last year’s report we wrote “we feel confident about our prospects from here” and

results have borne that out.

Today, our conviction in the long-term inflationary endgame has never been higher but we are

cognisant of the fact that the journey to that point will not be direct and the timing is uncertain.

For that reason it has never been more important to hold a mix of assets that will deliver our

investment objectives regardless of the direction of financial markets. We will continuously aim to

provide a superior risk adjusted return which focuses on preservation of capital and is

uncorrelated with equities or any other asset class.

NAV TR Share price Share price TR CorrelationPerformance NAV TR % annualised % TR % annualised % with equities

1 year 15.3 15.3 19.5 19.5 0.69

3 years 25.8 8.0 26.9 8.3 0.43

5 years 37.9 6.6 41.2 7.1 0.45

10 years 62.7 5.0 59.5 4.8 0.51

Since inception (Jul 2004) 259.4 7.8 265.2 7.9 0.45

Principal performance contributions

Percentage contribution to NAV total return for 12 months to 30 June 2021

-2.5

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Creditprotection

Gold andgold equities

Options

Index-linkedbonds

Bitcoin

Equities

Investment Manager’s report

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Ruffer Investment Company is not alone in posting good performance numbers over the last 12

months. However, our returns are distinctive both in terms of their source and profile.

1 The shape of the equity book – our equity risk has been focused on value, cyclicals,

commodities, and financials since 2018. We added to these positions in the summer of 2020

when the market was most enamoured with the ‘covid winners’. We enjoyed particularly strong

returns from the stocks geared into re-opening and recovery; UK banks (+57% and 256bps),

Walt Disney (+67% and 82bps), General Motors (+135% and 84bps), Cemex (+115% and

40bps) and Arcelor Mittal (+97% and 65bps). These thematic exposures in the portfolio drove

significant performance, particularly since the announcement of the vaccine approvals in

November 2020. Exposure to UK equities, previously unloved by investors, also came to life

with our smaller companies exposure of around 5% adding 186bps to the return in the 12

months.

2 Bitcoin – exposure to bitcoin was a significant contributor over the period (+515bps) and offers

a good example of the flexibility of the Ruffer strategy and our willingness to embrace

uncomfortable or idiosyncratic risks. A well-timed exit of our exposure in April 2021 avoided

giving back much of the gain in the recent sell-off. MicroStrategy (+421% and 47bps) and

Galaxy Digital (+337% and 58bps) were also sold in February.

3 Active duration management – Q1 2021 was one of the worst for bonds in modern history.

Despite having over 30% of the portfolio in index-linked bonds, we were able to offset the

damage from this risk through the opportunistic use of payer swaptions that lowered the net

portfolio duration (sensitivity to changes in interest rates) to zero and index-linked bonds were

helped by rising inflation expectations.

Credit protections which helped the portfolio to weather the covid-19 crash were significantly

monetised in the heat of the crisis in March 2020. However, within the period, the remaining

position gave back 250bps of performance as governments and central banks rode to the rescue of

corporate debt markets. We decided it was necessary to retain some of these positions due to

ongoing fragility and uncertainty in markets, but the position was reduced in both size and

potency.

Gold’s contribution was also negative, something that feels quite anomalous in the context of

rampant monetary stimulus and inflation concerns. On 30 June 2020, the gold price was

US$1,780 and it closed the period a year later at US$1,790, up less than 1% with the gold mining

equities index also flat. Our exposure is focused on higher beta, more operationally geared smaller

gold mining stocks.

20

Portfolio changes

In the interim report we covered our rationale for adding bitcoin exposure plus two bitcoin proxies

(MicroStrategy and Galaxy Digital) in November 2020. The rationale was that bitcoin was an

emerging store of value and institutional investors would move to adopt it as a ‘digital gold’. This

narrative played out faster than we could have foreseen as show in the chart below.

Bitcoin may yet fulfil its potential, but the market displayed many signs of froth – retail

speculation, excessive leverage, the Coinbase IPO, Tom Brady’s laser eyes, Dogecoin, Elon Musk

hosting Saturday Night Live, US$60m non-fungible tokens (NFTs) etc.

Bitcoin – surfing a wave of institutional adoption… and liquidity

Source: Bloomberg, Ruffer, data to 30 June 2021

In the short term at least, bitcoin was exhibiting the characteristics of a risky, speculative asset and

therefore no longer fulfilled the portfolio role we had intended for it as a protective and

diversifying asset. We sold all our exposure in April 2021 (+515bps performance contribution). Our

Chief Investment Officer, Henry Maxey, surmised that excess liquidity has a wonderful way of

bringing the hopes of the future into the prices of the present.

During the period there were two returns of capital from Ruffer Illiquid Multi-Strategies Fund

2015. Firstly 0.7% in March 2021 and then 2.3% in June 2021. In effect, this was a return of some

of the profits from the bitcoin exposure.

0

10,000

20,000

30,000

40,000

50,000

60,000

May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Dec 20 Jan 21 Feb 21 Mar 21 Apr 21 Jun 21

Microstrategy Fidelity

Bitcoin price, USD

PayPalMorgan Stanley

Paul Tudor Jones

(WallStBets, Elon Musk)

Ruffer bought Ruffer sold 50% Ruffer exit

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Having been hedged for the interest rate spike in Q1 2021, in May and June 2021 we added 3% to

the long-dated UK index-linked gilts, taking these to 13% of the portfolio. We continue to believe

these are the best assets for the extended period of financial repression we envisage for the coming

years (see below).

Within the equity book, we have been focused on reducing risk in the summer months after value

and cyclical stocks experienced a strong run. We have kept equities at around 40% with consistent

sales and we have slowly rotated into what we have come to call ‘the forgotten middle’ making up

around 8% of the portfolio. This is a cohort of defensive companies which are delightfully dull, sit

outside the bluster of the value/growth debate and offer solid cyclically insensitive earnings on low

valuations. This includes Tesco, Cigna and Centene, but also newer purchases like

GlaxoSmithKline, Fresenius Medical and BAE Systems.

Investment outlook

A new inflationary regime

In previous reports and elsewhere we have argued covid-19 has acted as an accelerant, catapulting

the world into a new economic regime. This new regime is characterised by the adoption of more

interventionist policies to target explicitly political causes such as climate change or inequality.

This blurring of the lines between monetary and fiscal policy will lead to higher economic and

inflation volatility and marks a stark contrast to the benign period of the past 40 years.

However, we are currently enjoying an economic boom which may well extend into 2022. What is

the recipe? Take one-part unleashed animal spirits as we exit lockdown, mix with accumulated

lockdown savings, pour on lashings of stimulus – serve in a supply constrained glass.

The debate du jour is whether the current inflationary spurt we are living through is a symptom of

this new economic regime or a transitory hangover from the supply and demand disruptions of the

lockdowns. The scale and breadth of the inflationary impulse is stunning. The chart shows the

percentage of businesses raising prices is at a 35 year high in the US.

22

Net of US firms reporting higher selling prices

Source: National Federation of Independent Businesses monthly survey

This is not a US phenomenon: global data is very similar. Wage pressures are everywhere,

companies cannot get staff. McDonalds are paying candidates US$50 to attend interviews.

Shortages are a key sign of inflation. The US administration has no sympathy for corporates: if you

want workers back, pay them more – this is about levelling up and inequality too.

Used car prices, container shipping rates, house prices, hotel rates, the cost of eating out – the

trend is clear, and it is up. Yet long term measures of inflation expectations remain anchored, the

market is confident this impulse shall recede.

We think this ‘transitory debate’ misses the point entirely. Of course, house prices will not rise at

10-20% annualised forever. Inflation is simply a measure of the rate of change. If that delicious

beer garden pint was £4.50 in 2019 and now it costs £6, it has inflated by 33%. Next year it might

cost £6.25. The Bank of England might say “See! Inflation was transitory, it’s only 4%, we told

you!”, but unless wages have risen by 39% since 2019, you should be feeling worse off.

We fully appreciate that due to base effects it is highly likely that as re-opening enthusiasm wanes

inflation is likely to be lower next year. Technically, the transitory crew might be correct, but

unless the beer reverts to £4.50, we would say it is 1-0 to the inflation hawks in the real world. The

price level is what comes out of your pocket not the second derivative.

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1986 1988 1991 1993 1996 1998 2001 2003 2006 2008 2011 2013 2016 2018 2021

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This is a febrile environment for a wage and demand spiral considering the context of vast ongoing

quantitative easing and seemingly endless fiscal stimulus packages.

The big problem is if the inflationary genie is out of the bottle, how might policymakers get it back

in?

The textbook response is that the central bank should raise interest rates. Realistically however,

this tool is not available to today’s cohort of central bankers for multiple reasons. Firstly, the

burden of debt in the world is just too great to service at higher interest costs. Secondly, the

political pressures to keep financial conditions supportive in aid of activist policy goals such as

tackling climate change or inequality have only grown stronger. So, if these inflationary pressures

prove more than transitory, we may realise for the first time in a few decades that central bankers

are not omnipotent.

“No, Mr Bond, I expect you to die.”

What are the portfolio implications of all this?

Despite global stock indices finishing the period at all-time highs, bond yields remaining low,

credit spreads tight and property prices booming, we must re-emphasise how dangerous we

believe the coming environment of inflation and volatility is for conventional portfolios.

Inflation changes the way cross-asset correlations behave. Today, the portfolio role of bonds is

spent: their role as a hedge is suspect and they effectively guarantee investors will miss their return

targets. Remind me why you own bonds?

We saw a glimpse of the future in Q1 2021 when the 30 year US Treasury, supposedly the safest

asset in the world, fell by more than 20% for the first time ever.

As the chart below shows, current inflation readings (the orange dot) correlate to a US ten year

bond yield of 5-6% not the current 1.5%. The evidence is the market is sanguine about any

enduring inflation risks.

24

Current inflation suggests bond yields are too low

Source: Bloomberg, data from June 1985 to June 2021

There is an asymmetry of risk, however. Bonds are a mathematically bounded asset class – returns

are certain to be low, a best case of 1.5% over 10 years before any inflation risk. If inflation risks

recede, then bond investors will earn a zero or slightly negative after inflation return. If inflation

remains elevated, then the risks for bond owners are catastrophic. Heads you don’t win much, tails

you lose a lot. The US ten year yield moving to just 3% (where it was in 2018) would cause a loss of

about 15% to bond holders.

Going further, investment grade credit paradoxically offers record low yields despite record levels

of debt outstanding. The mathematics of bonds is such that at lower rates the duration increases.

This asset class is vulnerable to even the smallest change in yields in response to a change in

inflation, credit or term risk premiums. Just a 1% change in investor’s required returns will wipe

out seven years of coupon income in capital losses (see below).

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US 10 year yield

CPI

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Years of coupon to recoup loss from a 1% lift in yield

Source: Minack Advisers, Bloomberg-Barclays, NBER

How are we protecting our shareholder’s capital?

The key takeaway is the traditional portfolio ballast in bonds is not just failing to protect, but is

actively adding to overall risk. But if conventional hedges are not going to cut it in the new

inflationary world, what else is there?

The benefit of being global, multi-asset, unbenchmarked investors is you can go anywhere and

invest in anything. This flexibility is increasingly essential in a world where safe havens are so

expensive they have become dangerous.

Inflation-linked bonds offer the natural bolthole for investors fleeing the tyranny of fixed income.

At the period end we had 26% of the portfolio in these bonds, the key asset being 13% in long-

dated UK inflation-linked gilts. The main driver for index-linked returns is the gap between

inflation and bond yields. This is something we expect to widen significantly as inflation and

growth accelerate, but bond yields remain pinned to the floor under the heavy boot of central

bankers.

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1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021

26

Gold continues to be a key asset for protection against rising inflation, financial repression and

failing trust in institutions. In the last year, precious metals lost some limelight to bitcoin, but the

relative stability in recent months has reminded investors of its attractions. We continue to think

of the gold price as the inverse of the market’s faith in central bankers’ ability to micromanage the

economy.

We believe for true protection we will need to rely upon the unconventional protective toolkit we

have assembled in the last few years.

Credit protection proved its worth last March when these investments almost doubled. Being long

credit spreads via Ruffer Multi-Strategies Fund 2015 continues to look a very attractive

proposition. The risk/reward is highly skewed in our favour from the current starting point and

from a portfolio perspective is almost certain to have a negative correlation to risk assets.

Payer swaptions offer the right, but not the obligation, to enter in a ‘pay fixed, receive floating swap

agreement’. In essence, an option which benefits from rising bond yields. Rising yields are a tough

environment for most asset classes and that makes this a rare and potent protection.

Equity puts – we continue to utilise puts on indices as a direct hedge to manage risk and net

exposure.

Other tools – although not currently of meaningful size in the portfolio we continue to monitor the

VIX, relative value arbitrage, FX volatility and cryptocurrencies as tools for further protection and

diversification.

We are also finding attractive investment opportunities in select real assets which are slightly off

the beaten track – PRS Reit, Hipgnosis Songs Fund, Trident Royalties, Weiss Korea, Tufton

Oceanic Assets and Taylor Maritime Investments all add something different to the portfolio.

Equities – there is currently one big duration trade going on in markets. Growth stocks are

underpinned by the same low bond yield that makes conventional bonds an unattractive addition

to the portfolio.

This dynamic is pervasive, reflecting a huge swathe of portfolios in the market and yet, as per bond

prices, it could break down spectacularly if inflationary pressures persist. Some investors have

bought into the siren-song that equities are an inflation hedge. Unfortunately, the facts do not

support this, particularly from the current starting point.

The chart below shows inflation versus price/earnings multiples and the relationship is clear.

Equities like low and stable inflation, as we have had in the last 30 years. Equities do not like

deflation or higher inflation – both scenarios cause a de-rating of the market. This risk is

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particularly pernicious from the current starting point (orange dot) of the highest equity multiples

on record.

Source: Minack Advisers. Operational earnings from 1988, monthly data from 1955. This chart shows two lines of best fit. R² at 0.55 excludes the TMT bubble.

To use a crude example, Microsoft may have the pricing power to pass on inflation but perhaps

inflation adds an economic risk premium that takes the p/e multiple from the current 34x to 20x,

where it was five years ago (a 40% drawdown). In 2012, Microsoft’s P/E ratio was 10x.

Reality is more nuanced; there are many equities which could act as inflation hedge. We own many

in the portfolio – banks, financials, energy stocks and commodity producers like Glencore or Yara.

The problem for passive or benchmarked investors is these stocks have withered to a small

percentage of the index. If you own the index, you do not own enough of them to make a

difference. In 1980 the energy sector, an obvious inflation beneficiary, was 28% of the S&P 500, in

2008 it was 15%, today it is 3% – the whole sector is about half as big as Apple.

28

Energy sector weighting in S&P 500 index

Source: Bloomberg, data to 7 July 2021

The bull case for commodity stocks is simple. They are a pure beneficiary of higher global

economic activity. The trends for growth, technology and ESG investing have left them unloved

and lowly valued. The green transition, which we fully embrace and have encouraged our investee

companies to embrace, has raised the cost of capital for these industries meaning there has been

little new supply or capex for several years. But the demand picture is, perhaps counterintuitively,

rather bright. Global oil demand is forecast to continue to grow for at least another five years and a

green world requires fixed capital and commodity investment spent upfront. One cannot make an

electric car or a smart grid without a lot of copper and cobalt (Glencore) or a significant amount of

oil related products (BP, Royal Dutch Shell, Equinor). Therefore, the earnings for these stocks are

potentially higher and more enduring than is currently factored into the price.

Our equity book continues to look nothing like the broader indices and the opportunity that

presents excites us.

A note of caution

There are two quotes which keep wandering through our minds.

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1999 2000 2002 2003 2005 2006 2008 2010 2011 2013 2014 2016 2017 2019 2021

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The first is from nineteenth century titan Lord Rothschild to “buy on the cannons and sell on the

trumpets”.

One of the great ironies about investing is that the best time to invest in risky assets is when

everything seems utterly bleak, like March 2020. A more dangerous time to invest is when

everything is going well and it seems obvious. At the end of June 2021, the US market completed

seven consecutive days of new all time highs, a feat not completed since the dot.com bubble.

The second quote is Robert Louis Stevenson’s accidentally sage investment advice when he

acknowledged sometimes “it is better to travel hopefully, than arrive”.

Just as the Coinbase IPO marked the recent top in bitcoin, perhaps ‘freedom day’ will mark the top

in markets? That would be delightfully paradoxical. The truth is nobody knows, but we believe

caution is warranted.

The Ruffer portfolio was flat when the market was down 30% at the March 2020 lows, we

preserved capital in the crisis, and we have made around a 30% return since then. Since November

2020 markets have been pricing in a recovery and re-opening which has yet to fully materialise.

There are clearly bubbles of exuberance in the economy and markets, trumpets if you will, that

urge prudence and caution.

There is a battle of competing forces. On the one hand we have a spring of economic momentum,

government and central bank support for markets and this is all underwritten by a sense that

investors earning nothing on cash have no alternative but to invest.

On the other hand, ponder an economy drowning in debt unevenly staggering out of a huge

recession with the looming threat of inflation because of a cocktail of supply chain bottlenecks,

reduced capacity and trillions of stimulus. And that cocktail, if served up, will be negative for all

asset markets.

Summary

Our key points are as follows

1 We have transitioned into a new economic regime of higher inflation and volatility

2 Conventional bonds no longer have a useful portfolio role

3 We are prepared with a broad toolkit of assets to protect against inflation and financial

repression

4 After a huge recovery, some parts of the markets are showing signs of froth and caution is

warranted

30

What we try to do at Ruffer is build an all-weather portfolio. One that offers our investors the

antidote to bubbles and hysteria. We have forged our reputation by making money in the three major

bear markets since the firm began in 1995 – dot.com, the financial crisis and then the covid-19 crash.

When we see bubbles forming, our approach has always been to eschew the mania and try to find

the assets people will panic into when the bubble pops. We owned no tech stocks in 2000 and we

owned no banks or property stocks in 2008.

Sometimes what you do not own is just as important as what you do own and that’s why being

totally un-benchmarked and being truly multi-asset, go-anywhere global investors is so important

as we pursue our capital preservation objective.

Asset allocation % Top 10 equity holdings %

Long-dated index-linked gilts 12.9 Lloyds Banking Group 2.6

Cash and other net current assets 10.3 Royal Dutch Shell 1.9

Short-dated bonds 8.5 BP 1.9

Illiquid strategies and options 7.5 NatWest Group 1.6

Non-UK index-linked 7.2 Centene 1.3

Gold and gold equities 6.6 GlaxoSmithKline 1.2

Index-linked gilts 5.6 Bristol-Myers Squibb 1.2

UK equities 20.1 Tesco 1.2

Japan equities 7.4 Cigna 1.1

North America equities 6.6 Sumitomo Mitsui Financial 1.0

Europe equities 5.7

Asia ex-Japan equities 0.6

Other equities 1.0

As at 30 June 2021. Pie chart totals may not equal 100 due to rounding

Ruffer AIFM Limited

5 October 2021

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At the Ruffer Group (“Ruffer”), we are committed to being good stewards of our investors’ assets.

To that end, environmental, social and governance (ESG) considerations are fully integrated into

our investment process.

We have one investment approach and conduct our own research. This means we can

systematically integrate ESG considerations across our whole research and investment process.

Our ESG approach is designed to identify material risks and opportunities that could impact our

investments. Our decision to invest in companies is based on both fundamental and ESG analysis

and we use a wide range of data sources to inform our analysis.

Equally important, our investment approach is an iterative process, and our ESG analysis informs

our active stewardship activities through engagement and voting.

Responsible investment report

32

Stewardship: voting and engagement

We believe stewardship activities can lead to lasting and meaningful change, resulting in better

long-term outcomes for our investors and for broader stakeholders, the environment and society.

Engagement improves our understanding of the material ESG risks a company faces and hopefully

helps those companies improve their performance. This is likely to result in superior outcomes and

returns for our investors. We will engage independently or through collaborative initiatives, such

as the Institutional Investors Group on Climate Change (IIGCC), Climate Action 100+ and the

Investor Mining and Tailings Safety Initiative.

In 2020, we focused our engagements on the themes of climate change, lobbying (specifically,

political contributions and trade association memberships), Japanese corporate governance and

tailings dams.

In fixed-income, we invest predominantly in government bonds and we endeavour to engage in

policy decision-making through industry bodies such as the IIGCC and the Investment

Association, particularly on climate change issues. We have responded to multiple consultations in

recent years in relation to the European Commission’s Action Plan on Sustainable Finance, as well

as the UK Treasury Select Committee’s Decarbonisation Inquiry.

The progress of our engagement is incorporated into our investment theses and informs our

investment decision-making and voting activity. Details of all our voting and engagement activity

is disclosed on our website in our quarterly and annual Responsible Investment Report and

Stewardship Report.

Voting policy

We take our voting responsibility seriously. The opportunity to vote enables us to encourage

boards and management teams to consider and address areas that we are concerned about, along

with those areas that we want to support. It is Ruffer’s policy to vote on AGM and Extraordinary

General Meeting resolutions, including shareholder resolutions and corporate actions, and we vote

on all shareholdings in the companies held by Ruffer Investment Company Limited (RICL).

We have access to proxy voting research, currently from Institutional Shareholder Services (ISS) to

assist in our decision-making process, but although we take note of proxy advisers’ voting

recommendations, we do not delegate or outsource our stewardship activities when deciding how

to vote on our shareholdings.

Voting can also be seen as an escalation method, especially if the outcome of engagement is

unsatisfactory. In 2020, we voted against management predominately on issues relating to the

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independence and effectiveness of directors, remuneration policies, capital structure and

supported climate-related shareholders proposals.

We think it is of fundamental importance that the majority of board members are independent to

provide a robust oversight of, and counterbalance to, a company’s management. This issue is

particularly significant in the mining sector, where we abstained on the re-election of directors at

Kinross Gold and Wheaton Precious Metals, and we will be engaging with these companies on this

issue.

On the topic of climate change, we supported two resolutions on Aena’s climate transition plan

which garnered shareholder and eventually board support.

Furthermore, we have engaged with ExxonMobil for a number of years on the company’s approach

to climate change, however due to limited progress being made, we voted against management

guidance by supporting the nominations of three independent directors proposed by activist hedge

fund, Engine No.1, as well as several shareholder resolutions. Sufficient shareholder support

resulted in three likely appointments to the board: a profound wake-up call for ExxonMobil and a

message to the industry to take investor concerns on climate change seriously.

We are likely to see more shareholder resolutions filed in 2021 on climate change and would expect

to support them, particularly where we believe there are long-term performance implications for

the businesses proactively addressing climate change-related risks.

34

Case studies

Case study 1: Volkswagen

Volkswagen (VW), which is headquartered in Germany, is one of the world’s largest auto

manufacturers.

Environmental and governance issues formed an integral part of our discussions on VW, both

internally and with the company.

Electric vehicles (EVs) – given the importance of EVs for the company’s strategy this was a key

part of the investment case. We focused on the ambition for EVs within the company, the plans it

has in place to meet internal targets and emissions regulations, and how remuneration and

company culture is aligned to enable the long-term transition. VW detailed the targets it has set for

vehicle production, the key partnerships it is establishing, how internal resources and investments

are being allocated between the EV and traditional internal combustion engine (ICE) businesses,

including re-skilling employees, and the commitment the company has made to not launch any

ICE models in developed markets beyond 2026 (in line with the goals of the Paris Agreement).

Given VW’s EV strategy and targets, we asked how this is linked to executive remuneration and we

encouraged transparency in disclosing this information to shareholders. The company explained it

plans to link executive remuneration with ESG factors and to provide improved disclosure of this

in the future.

Corporate governance – the second theme we focused on was the ‘Dieselgate’ emissions scandal

and the corporate governance implications. We discussed how the culture at VW has changed since

this scandal and what initiatives have been put in place, both top-down and bottom-up. The

company explained the evolution necessary for its long-term sustainability, such as a board level

position for integrity and legal affairs, which encourages a ‘speak up culture’ across the business.

On board structure, we raised concerns on the independence of the audit committee, given the

length of tenure of two of the committee members and the fact that a controlling shareholder is

also the Chair. The company acknowledged these issues, including the limitations of the dual

board structure, and assured us this is being reviewed internally. We will continue to engage on

these topics.

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Case study 2: Land Securities

Land Securities is a leading UK real estate company.

Given the company’s leadership on environmental sustainability in the sector, we began with a

discussion on the drivers of its ambitions. The company explained that it sees sustainability as

important both in terms of providing a competitive advantage and in terms of risk management. It

has also been participating in various industry initiatives to drive changes at a sector level. We

highlighted the importance of sharing best practices and encouraged the company to continue

working with its peers and other stakeholders, including tenants, on sustainability efforts. Through

our discussions, we also learnt more about the culture at the company and were encouraged to see

sustainability embedded in the business processes, targets and remuneration.

The company recently improved its net-zero 2030 CO2 emissions reduction targets from 40% to

70% for its operational energy use and suggested that it will offset all other emissions. The

company explained that the targets encompassed all operational aspects of the business, but some

scope 3 emissions are excluded as the sourcing of energy by individual tenants is not always within

its sphere of influence. These emissions are, however, included in its net-zero targets for 2030 and

the company has also been increasing its engagement with these tenants to find potential areas of

improvement. We also discussed green building certifications and encouraged the company to

continue standing behind industry standards and certifications and encourage laggards to adopt

these best practices.

Lobbying

Many companies will make political contributions and have trade association memberships as a

way of lobbying governments around the world. It is important to us that a company has robust

policies around this activity and that its lobbying is aligned with other ESG targets and ambitions.

In 2020, we engaged with several companies on increasing transparency around their lobbying

activities, often building on discussions in 2018 and 2019, asking for public disclosure of political

contributions and trade association memberships. Over 2020, we supported shareholder proposals

at General Motors and Walt Disney asking for enhanced disclosure.

In response to previous shareholder resolutions in 2018 and 2019, Walt Disney has increased its

disclosure of trading association membership, but included only the ones based in the US. When

36

engaging with them, we stated clearly to the company that we were disappointed it has not

expanded its analysis and that we would support the shareholder resolution at the 2020 AGM.

For General Motors whilst we acknowledge progress has been made since our discussions in 2019,

we did not deem this sufficient. We noted our expectations of lobbying disclosure and stressed that

we see this as an important issue for General Motors, given the industry in which it operates and

the political environment in the US, and we will continue to engage on this topic.

Climate change

The effects of climate change can be felt in all regions of the world and thus stoke political tensions

and intensify geopolitical instability. Markets don’t yet seem to be accounting appropriately for

these changes, which creates both risks and opportunities. At Ruffer, we consider climate change

related risks and opportunities for all our investments.

Over the past year, we have intensified our engagements with companies on climate change to

encourage them to adapt their business models to align with the transition to a low-carbon

economy. We published our first Task Force on Climate-related Financial Disclosures (TCFD)

report this year, which provides insight into our management of climate-related risks.

Climate change framework

Our commitment to reducing carbon emissions applies to our investee companies, Ruffer LLP, as

well as RICL. Companies RICL invests in increasingly face risks from the physical aspects of the

climate changing around us and from the policy and technological changes necessary to move to a

net-zero carbon economy, known as ‘physical’ and ‘transition’ risks. These risks, if poorly

managed, could harm our shareholders’ investments. Careful and concerted management is

essential, at both a portfolio and company level. The TCFD’s recommendations help us to

determine the nature, scale and management of climate-related risks and opportunities across

sectors and geographies. Ruffer supports the Paris Agreement, and we advocate the transition to a

low-carbon economy consistent with the goal of keeping the increase in global average

temperature to well below 2°C.

Ruffer published its inaugural TCFD report in 2021 and this is available at ruffer.co.uk/responsible-

investing. It introduces Ruffer’s Climate Change Framework and provides a response to the

recommendations of the TCFD. The report exhibits our climate-related activities over the past few

years and provides an insight into how our understanding of the risks facing our investee

companies has evolved. We have set targets for the year ahead, committing to a further

strengthening of our approach in managing risk and identifying investment opportunities. These

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include increasing engagement activities on climate change and TCFD disclosure, encouraging

hard-to-abate companies to join industry initiatives, integrating climate change scenario analysis

into our investment risk process, and incorporating climate change analysis into overall portfolio

thinking. This report is designed to provide detail and clarity to our approach, and to help our

investors meet their reporting requirements.

In addition to considering the carbon footprint of the companies in which we invest, we also

monitor the emissions from our own business. Since 2017, Ruffer LLP has commissioned South

Pole to calculate the carbon footprint of its business. Through reducing emissions and purchasing

carbon offsets we have been certified as carbon neutral since 2017.

ESG disclosures

Ruffer has been a signatory to the Principles for Responsible Investment (PRI) since 2016 and we

have A+ scores for strategy and governance and A scores in listed equity incorporation and active

ownership since 2018.

We are a Tier 1 signatory to the FRC’s 2012 UK Stewardship Code and have submitted our

response to the revised 2020 code in early 2021. Details are available at ruffer.co.uk/responsible-

investing. We are members of Climate Action 100+ and the Institutional Investors Group on

Climate Change as well as the Transition Pathway Initiative. In 2021 we also supported the launch

of the Association of Investment Companies’ (AIC) initiative for disclosure of the ESG policies of

all investment companies – full details are available at theaic.co.uk.

38

Holding at % of totalInvestments Currency 30 June 21 Fair value £ net assets

UK index-linked gilt 1.875% 22/11/2022 GBP 20,500,000 32,385,876 5.62

UK index-linked gilt 0.125% 22/03/2068 GBP 9,100,000 30,557,016 5.31

UK gilt 3.75% 07/09/2021 GBP 26,000,000 26,176,020 4.55

Ruffer Illiquid Multi Strategies Fund 2015* GBP 29,930,171 24,456,899 4.24

UK index-linked gilt 0.125% 22/11/2065 GBP 8,100,000 24,153,776 4.20

LF Ruffer Gold Fund* GBP 7,676,617 21,602,768 3.75

Ruffer SICAV UK Mid & Smaller Companies Fund* GBP 73,147 21,563,627 3.73

US Treasury inflation indexed bond 0.625% 15/04/2023 USD 24,100,000 19,799,732 3.44

UK index-linked gilt 0.375% 22/03/2062 GBP 6,050,000 19,488,142 3.38

Ruffer Protection Strategies International* GBP 5,935,102 18,488,436 3.21

* Ruffer Illiquid Multi Strategies Fund 2015 Ltd and Ruffer Protection Strategies International are classed as related parties as they share the same Investment

Manager (Ruffer AIFM Limited) as the Company. LF Ruffer Gold Fund and Ruffer SICAV UK Mid & Smaller Companies Fund are also classed as related parties as

their investment manager (Ruffer LLP) is the parent of the Company’s Investment Manager.

Top ten holdings

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At the date of this report, the Company has five non-executive Directors, all of whom are

independent.

Christopher Russell, aged 72 and a resident of Guernsey, is a non-executive director of investment

and financial companies. These include Hanseatic Asset Management Ltd, a family office in

Guernsey, and JPMorgan Global Core Real Estate Assets Ltd, a vehicle which invests in unlisted

global JPMorgan real estate and infrastructure funds. Prior to a non-executive career, Chris was a

director of Gartmore Investment Management plc, where he was Head of Gartmore’s businesses in

the US and Japan. Before that he was a holding board director of the Jardine Fleming Group in

Asia, resident in Japan then Hong Kong. Prior to joining Flemings in London, he was with Phillips

& Drew Asset Management. He is a Fellow of the UK Society of Investment Professionals and a

Fellow of the Institute of Chartered Accountants in England and Wales. He was commissioned by

John Wiley to publish in 2006 ‘Trustee Investment Strategy for Endowments and Foundations’.

Mr. Russell was appointed to the Board on 1 December 2016 and became Chairman of the Board

on 4 December 2020.

Shelagh Mason, aged 62 and a resident of Guernsey, is a solicitor specialising in English

commercial property. She retired as a consultant with Collas Crill LLP in October 2020. She is also

non-executive Chairman of the Channel Islands Property Fund Limited, sits on the Board of

Riverside Capital PCC and Skipton International Limited, a Guernsey Licensed bank, and is a non-

executive director of The Renewables Infrastructure Group Limited, a FTSE 250 company. Shelagh

also sits on the board of Starwood European Real Estate Finance Limited, a London-listed

company. Previously Shelagh was a member of the board of directors of Standard Life Investments

Property Income Trust Limited, a property fund listed on the London Stock Exchange for 10 years

until December 2014. She retired from the board of MedicX Fund Limited, a main market listed

investment company investing in primary healthcare facilities in 2017 after 10 years on the board.

She is a past Chairman of the Guernsey Branch of the Institute of Directors, a member of the

Chamber of Commerce and the Guernsey International Legal Association, and she also holds the

IOD Company Direction Certificate and Diploma with distinction. Mrs Mason was appointed to the

Board on 1 June 2020.

Jill May, aged 60 and a resident of the United Kingdom, has 25 years’ experience in investment

banking, 13 years in M&A with S.G. Warburg & Co. Ltd. and 12 years as a Managing Director at

UBS, focused on group strategy and organisational change. She has broad knowledge of

investment banking, asset management and private banking in the UK and EMEA. She is an

External Member of the Prudential Regulation Committee of the Bank of England and was a

Directors

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non-executive director of the CMA from its inception in 2013 until October 2016, and a Panel

Member of the CMA until 2018. She is a non-executive director of JPMorgan Claverhouse, a UK

listed investment trust, Standard Life Investments Property Income Trust, a UK-listed REIT, and

of AlphaFMC, a UK-listed financial consulting company. Ms. May was appointed to the Board on

17 March 2017 and became Senior Independent Director on 4 December 2020.

David Staples, aged 64 and a resident of Guernsey, is a fellow of the Institute of Chartered

Accountants in England and Wales and an associate of the Chartered Institute of Taxation. He also

holds the Institute of Directors’ Diploma in Company Direction. For thirteen years until 2003,

Mr Staples was a partner with PricewaterhouseCoopers (PwC) and led the tax practice in the South

East of England advising several large family and owner-managed businesses. He was also a

member of the management board of the firm’s London and South East Middle Markets Tax

Practice. Since leaving PwC, Mr Staples has joined the boards of several listed companies as a non-

executive director. He has served as chairman of MedicX Fund Limited and chairman of the audit

committees of Henderson Far East Income Limited and Aberdeen Private Equity Fund Limited.

He is currently a director of NB Global Monthly Income Fund Limited and Baker Steel Resources

Trust Limited, both of which are listed on the London Stock Exchange. He is also a director and

chairman of the general partners of six private equity funds advised by Apax Partners. Mr Staples

was appointed to the Board on 2 March 2018.

Nicholas Pink, aged 53 and a resident of the United Kingdom, has extensive senior management

experience in financial services with previous roles at UBS Investment Bank, including Global

Head of Research, Head of European Research, Head of Asia Research and Head of European

Equities. Prior to this he was Head of European Utilities Research at UBS Investment Bank. He is a

non-executive director of JP Morgan Russian Securities plc, a UK-listed investment trust, and of

Redburn Europe Limited, an independent provider of research and execution services to

institutional investors. Mr Pink was appointed to the Board on 1 September 2020.

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The Directors of the Company present the audited Financial Statements and their report for the

year ended 30 June 2021 which have been prepared in accordance with the Companies (Guernsey)

Law, 2008 (‘the Company Law’).

Registration

The Company was incorporated with limited liability in Guernsey on 1 June 2004 as a company

limited by shares and as an authorised closed-ended investment company. As an existing

closed-ended fund the Company is deemed to be granted an authorised declaration in accordance

with section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and

rule 6.02 of the Authorised Closed-ended Investment Schemes Rules 2008.

Principal activity and investment objective

The Company is a Guernsey authorised closed-ended investment company with a premium listing

on the London Stock Exchange (LSE). The principal objective of the Company is detailed in the

Business Model and Strategy on page 12 of the Financial Statements.

Block listing facility

The block listing facility is set out in note 13 on page 99. During the year, 23,930,000 new

redeemable participating preference shares were allotted or issued under the block listing facility

(30 June 2020: no redeemable participating preference shares issued).

Purchase of own shares by the Company

The Company may purchase, subject to various terms as set out in its Articles and in accordance

with the Companies (Guernsey) Law, 2008, up to 14.99%. of the Company’s shares in issue

following the admission of shares trading on the LSE’s market for listed securities. For additional

information refer to note 20 on pages 118 to 119.

The Company did not buy back any shares during the year (30 June 2020: Nil).

The Board also has the discretion to operate the Redemption Facility, offering shareholders the

possibility of redeeming all or part of their shareholding for cash at NAV, if it appears appropriate

to do so.

Results and dividends

The results for the year are set out in the Statement of Comprehensive Income on page 83. Details

of dividends paid and proposed are set out in note 5 on page 93.

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Report of the Directors

Subsequent events

Events occurring after the balance sheet date are disclosed in note 21 on page 119 in the Financial

Statements.

Shareholder information

The Company announces its unaudited NAV on a weekly basis and at the month end. A monthly

report on investment performance is published by the Company’s Investment Manager, on the

Company’s website, ruffer.co.uk/ric.

Investment management

The key terms of the Investment Management Agreement and specifically the fee charged by the

Investment Manager are set out in notes 8 and 16 of the Financial Statements.

The Board reviews on an ongoing basis the performance of the Investment Manager and considers

whether the investment strategy utilised is likely to achieve the Company’s investment objective of

realising a positive total annual return, after all expenses, of at least twice the return of the Bank of

England Bank Rate.

In accordance with Listing Rule 15.6.2 (2) R and having formally appraised the performance,

investment strategy and resources of the Investment Manager, the Board has unanimously agreed

that the interests of the shareholders as a whole are best served by the continuing appointment of

the Investment Manager on the terms agreed.

The Investment Management Agreement will continue in force until terminated by the Investment

Manager or the Company giving to the other party thereto not less than 12 months’ notice in

writing.

Directors

The details of the Directors of the Company during the year and at the date of this report are set

out on pages 40 and 41 and in the Management and Administration summary on page 126

Directors’ interests

The details of the number of redeemable participating preference shares held beneficially by the

Directors who held office at 30 June 2021 and up to the date of this report are set out on in note 16

on page 102.

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Substantial share interests

As at 31 August 2021*, the Company has received notifications in accordance with the FCA’s

Disclosure and Transparency Rule 5.1.2 R of the following interests in 3% or more of the voting

rights attaching to the Company’s issued shares.

% of issuedInvestor Shares held share capital

Rathbones 26,504,997 12.26

Brewin Dolphin, stockbrokers 19,493,975 9.01

Hargreaves Lansdown, stockbrokers 16,961,474 7.84

Interactive Investor 15,050,670 6.96

Tilney 12,153,987 5.62

Charles Stanley 11,159,950 5.16

AJ Bell 8,449,574 3.91

*Data is taken from the latest available Share Register Analysis produced by Richard Davies Investor Relations Limited

International tax reporting

For the purposes of the US Foreign Accounts Tax Compliance Act (FATCA), the Company

registered with the US Internal Revenue Service (IRS) as a Guernsey reporting Foreign Financial

Institution (FFI) in June 2014, received a Global Intermediary Identification Number

(99DLPF.99999.SL.831), and can be found on the IRS FFI list.

The Common Reporting Standard (CRS) is a standard developed by the Organisation for Economic

Co-operation and Development (OECD) and is a global approach to the automatic exchange of tax

information, to counter tax evasion and to build upon other information-sharing legislation, such

as FATCA. Guernsey has adopted the CRS, which came into effect on 1 January 2016.

The Board confirms that the Company’s FATCA and CRS submissions for 2020 were submitted by

the deadline of 30 June 2021.

The Company is committed to zero tolerance towards the facilitation of tax evasion.

Alternative Investment Fund Managers Directive

The Company is categorised as a non-EU Alternative Investment Fund (AIF). The AIFMD seeks to

regulate managers of AIFs, such as the Company. It imposes obligations on AIFMs who manage

AIFs in a member state of the European Economic Area (EEA state), or who market shares in AIFs

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to investors who are domiciled, or with a registered office, in an EEA state. Under the AIFMD, an

AIFM must be appointed and must comply with various organisational, operational and

transparency requirements.

The Company has appointed the Investment Manager to act as AIFM on behalf of the Company.

The Investment Manager is responsible for fulfilling the role of the AIFM and ensuring the

Company complies with the AIFMD requirements. The AIFM has no direct employees as it

delegates its duties to Ruffer LLP. Ruffer LLP’s employee remuneration disclosure requirements

under the AIFMD are included in its Pillar III remuneration disclosure statement.

Non-mainstream Pooled Investments

The Company intends to be operated in such a manner that its shares are not categorised as non-

mainstream pooled investments. Among other things, this requires the Company to pay dividends

totalling in excess of 85% of any net income that it receives or is deemed to receive for UK tax

purposes on an annual basis so that it would qualify as an investment trust if it were UK tax-

resident.

Disclosure of information to the Independent Auditor

Each of the persons who is a Director at the date of approval of the Financial Statements confirms

that

1 so far as each Director is aware, there is no relevant audit information of which the Company’s

Auditor is unaware and

2 each Director has taken all steps he ought to have taken as a Director to make himself aware of

any relevant audit information and to establish that the Company’s Auditor is aware of that

information.

This confirmation is given and should be interpreted in accordance with the provisions of Section

249 of the Companies (Guernsey) Law, 2008 (‘company law’).

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements in

accordance with applicable Guernsey law and regulations.

Guernsey company law requires the Directors to prepare Financial Statements for each financial

year. Under that law they have elected to prepare the Financial Statements in accordance with

International Financial Reporting Standards (IFRSs) as adopted by the European Union and

applicable law.

Under company law, the Directors must not approve the Financial Statements unless they are

satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or

loss of the Company for that period.

In preparing the Financial Statements, International Accounting Standard 1 requires that

directors –

– select suitable accounting policies and apply them consistently

– make judgements and estimates that are reasonable, relevant and reliable

– state whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the Financial Statements

– assess the Company’s ability to continue as a going concern, disclosing, as applicable, matters

related to going concern and

– use the going concern basis of accounting, unless they either intend to liquidate the Company

or cease operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping proper accounting records that are sufficient to show

and explain the Company’s transactions and disclose with reasonable accuracy at any time the

financial position of the Company and enable them to ensure that the Financial Statements comply

with Company Law. They are also responsible for safeguarding the assets of the Company and

hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the oversight of the maintenance and integrity of the corporate

and financial information included on the Company’s website, ruffer.co.uk/ric. Legislation in

Guernsey governing the preparation and dissemination of Financial Statements may differ from

legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge –

– the Financial Statements have been prepared in conformity with IFRS as issued by the IASB

and adopted by the European Union, give a true and fair view of the assets, liabilities, financial

position and profit or loss of the Company as required by DTR 4.1.12

– the Annual Financial Report, taken as a whole, is fair, balanced and understandable and

provide the information necessary for the shareholders to assess the Company’s performance,

business model and strategy and

46

– the Annual Financial Report including information detailed in the Chairman’s review, the

Report of the Directors, the Investment Manager’s report, the Report of the Depositary and the

notes to the Financial Statements, includes a fair review of the development and performance

of the business and the position of the Company together with a description of the principal

risks and uncertainties that it faces, as required by

a DTR 4.1.8 and DTR 4.1.9 of the Disclosure and Transparency Rules, being a fair review of

the Company business and a description of the principal risks and uncertainties facing the

Company and

b DTR 4.1.11 of the Disclosure and Transparency Rules, being an indication of important

events that have occurred since the end of the financial year and the likely future

development of the Company.

On behalf of the Board

David Staples

Director

5 October 2021

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Corporate governance

On 1 January 2016, the Company became a member of the Association of Investment Companies

(AIC) and complies with the 2019 AIC Code of Corporate Governance issued in February 2019 (‘the

AIC Code’), effective for accounting periods commencing on or after 1 January 2019. By complying

with the AIC Code, the Company is deemed to comply with both the UK and Guernsey Financial

Services Commission (GFSC) corporate governance codes.

To ensure ongoing compliance with these principles the Board receives a report from the Company

Secretary on an annual basis identifying how the Company is in compliance and identifying any

changes that might be necessary.

The AIC Code is available on the AIC’s website, theaic.co.uk.

The Board, having reviewed the AIC Code, considers that it has maintained procedures during the

year ended 30 June 2021 and up to the date of this report to ensure that it complies with the AIC

Code except as explained elsewhere in the Corporate Governance Statement.

Guernsey regulatory environment

The GFSC’s Finance Sector Code of corporate governance (‘the GFSC Code’) comprises Principles

and Guidance, and provides a formal expression of good corporate practice against which

shareholders, boards and the GFSC can better assess the governance exercised over companies in

Guernsey’s finance sector. The GFSC recognises that the different nature, scale and complexity of

business will lead to differing approaches to meeting the GFSC Code.

Role of the Board

The Board is the Company’s governing body and has overall responsibility for ensuring the

Company’s success by directing and supervising the affairs of the business and meeting the

appropriate interests of shareholders and relevant stakeholders, while enhancing the value of the

Company and also ensuring protection of investors. A summary of the Board’s responsibilities is as

follows –

– statutory obligations and public disclosure

– strategic matters and financial reporting

– review of investment performance and associated matters

– risk assessment and management including reporting compliance, governance, monitoring and

control and

– other matters having a material effect on the Company.

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Corporate governance statement

The Board’s responsibilities for the Annual Report are set out in the Statement of Directors’

Responsibilities on pages 45 to 47.

The Board has contractually delegated responsibility for the management of its investment

portfolio, the arrangement of custodial and depositary services and the provision of accounting

and company secretarial services. The Board has adopted a schedule of matters specifically

reserved for its decision-making and distinguishing these from matters it has delegated to the

Company’s key service providers. This schedule is available on the Company’s website,

ruffer.co.uk/ric.

The Board needs to ensure that the Financial Statements, taken as a whole, are fair, balanced and

understandable and provide the information necessary for shareholders to assess the Company’s

performance, business model and strategy.

In seeking to achieve this, the Directors have set out the Company’s investment objective and

strategy (see page 12) and have explained how the Board and its delegated Committees operate and

how the Directors review the risk environment within which the Company operates and set

appropriate risk controls. Furthermore, throughout the Financial Statements the Board has sought

to provide further information to give shareholders a fair, balanced and understandable view.

Relations with shareholders

The Board welcomes shareholders’ views and places great importance on communication with its

shareholders. The Board receives regular reports on the views of its shareholders from the

Company’s Broker and Investment Manager which are taken into consideration as part of the

Board’s decision-making process.

The Chairman and other Directors are available to meet shareholders if required and the AGM of

the Company provides a forum for shareholders to meet and discuss issues with the Directors of

the Company.

The Chairman and Directors offer to meet with shareholders at regular investor presentations co-

ordinated by the Investment Manager to discuss key strategic matters and any issues raised by

shareholders. At present, due to covid-19 restrictions, these presentations are confined to on-line

interactions rather than face-to-face meetings.

In addition, the Investment Manager maintains a website which contains comprehensive

information, including financial reports, prospectus and monthly reports on investment

performance which contains share price information, investment objectives, investment reports

and investor contacts.

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Stakeholders and Section 172

Whilst directly applicable to companies incorporated in the UK, the Board recognises the intention

of the AIC Code that matters set out in section 172 of the Companies Act, 2006 are reported. The

Board strives to understand the views of the Company’s key stakeholders and to take these into

consideration as part of its discussions and decision-making process. As an investment company

the Company does not have any employees and conducts its core activities through third-party

service providers. Each service provider has an established track record and is required to have in

place suitable policies and procedures to ensure it maintains high standards of business conduct,

treats customers fairly, and employs corporate governance best practice.

The Board’s commitment to maintaining high-standards of corporate governance, combined with

the Directors’ duties incorporated in the Companies (Guernsey) Law, 2008, the Company’s

constitutive documents, the Disclosure Guidance and Transparency Rules and the Market Abuse

Regulation, ensure that shareholders are provided with frequent and comprehensive information

concerning the Company and its activities.

Whilst the primary duty of the Directors is owed to the Company as a whole, the Board considers

as part of its decision-making process the interests of all stakeholders. Particular consideration is

given to the continued alignment between the activities of the Company and those that contribute

to delivering the Board’s strategy, which include the Company’s Investment Manager, the AIFM,

the Administrator, the Broker and the Custodian.

Through the Board’s ongoing programme of shareholder engagement (see ‘Relations with

shareholders’ above) and the reports produced by each key service provider at quarterly Board

meetings, the Directors are satisfied that sufficient information is provided so as to ensure the

matters set out in section 172 of the Companies Act are taken into consideration as part of the

Board’s decision-making process.

The Board respects and welcomes the views of all stakeholders. Any queries or areas of concern

regarding the Company’s operations can be raised with the Company Secretary.

Composition and independence of the Board

The Board currently comprises five non-executive Directors, all of whom are considered to be

independent. The Board considers that it has a good balance of skills and experience to ensure it

operates effectively. The Directors of the Company are listed on pages 40 and 41 and in the

Management and Administration summary on page 126.

50

The Company has no employees and therefore there is no requirement for a chief executive. None

of the Directors has a contract of service with the Company.

The current Chairman of the Board is Mr Christopher Russell. Mr Russell was appointed as

Chairman of the Board on 4 December 2020 following the retirement of Ashe Windham.

The Chairman of the Board must be independent for the purposes of Chapter 15 of the Listing

Rules. Mr Russell is considered independent because he –

– has no current or historical employment with the Investment Manager

– has not provided any professional advisory services to the Investment Manager and

– has no current directorships in any other investment funds managed by the Investment

Manager.

As Chairman, Mr Russell is responsible for leading the Board of Directors and for ensuring its

effectiveness in all aspects of its role. The key responsibilities of the Chairman are as follows –

– meeting with major shareholders to obtain a balanced understanding of any issues, concerns,

and providing feedback to the Board

– demonstrating ethical leadership and promoting the highest standards of integrity, probity and

corporate governance throughout the Company

– setting the Board’s agenda and ensuring the Board has in place effective decision-making

processes which are supported by accurate and high-quality information and

– leading the annual performance evaluation of the Board and taking all appropriate actions

based on the results of the evaluation.

In accordance with the AIC Code and in recognition of the Board’s desire to maintain high

standards of corporate governance, the Board appointed Mrs Jill May as the Company’s Senior

Independent Director (SID) with effect from 4 December 2020.

The key roles and responsibilities of the SID are as follows –

– providing support to the Chairman in relation to matters of Board effectiveness and

governance

– being available to shareholders and the other Directors as an additional point of contact or to

communicate any concerns to the Board

– leading the annual performance evaluation of the Chairman of the Board and succession

planning for the Chairman’s role and

– attending meetings with major shareholders alongside the Chairman, as required.

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The Board has engaged external companies to undertake the investment management,

administrative and custodial activities of the Company. Documented contractual arrangements are

in place with these companies which define the areas where the Board has delegated responsibility

to them. For additional information refer to page 57.

The Company holds a minimum of four Board meetings per year to discuss strategy, general

management, structure, finance, dividend payments, capital management, corporate governance,

ESG matters, marketing, risk management, compliance and gearing, contracts and performance.

The quarterly Board meetings are the principal source of regular information for the Board,

enabling it to determine policy and to monitor performance, compliance and controls but these

meetings are supplemented by communication and discussions throughout the year.

Representatives of the Investment Manager, Administrator and Company Secretary attend each

Board meeting either in person or by videoconference, thus enabling the Board to fully discuss and

review the Company’s operations and performance. In addition, representatives from the

Company’s Broker attend at least two Board meetings a year. Each Director has direct access to the

Investment Manager and Company Secretary and may at the expense of the Company seek

independent professional advice on any matter.

Attendance at the Board and other meetings during the year was as follows –

Management

Audit & Risk Engagement

Board Committee Committee

Meetings Scheduled Attended Scheduled Attended Scheduled Attended

Ashe Windham 2 2 2 2 – –

Christopher Russell 4 4 3 3 1 1

Jill May 4 4 3 3 1 1

David Staples 4 4 3 3 1 1

Shelagh Mason 4 4 3 3 1 1

Nicholas Pink 4 4 3 3 1 1

Note: Relates to all meetings scheduled during each Director’s term of office. Ashe Windham resigned as a Director on 4 December 2020.

In addition to the above meetings, a number of ad-hoc meetings of an administrative nature were

held during the year.

Conflicts of interest

Directors are required to disclose all actual and potential conflicts of interest as they arise for

approval by the Board, who may impose restrictions or refuse to authorise conflicts. The process of

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consideration and, if appropriate, approval will be conducted only by those Directors with no

material interest in the matter being considered. The Board maintains a Conflicts of Interest policy

which is reviewed periodically and a Business Interests and Potential Conflicts of Interest Register

which is reviewed by the Board at each quarterly Board meeting.

Directors’ indemnity

Directors’ and Officers’ liability insurance cover is maintained by the Company on behalf of the

Directors.

Re-election

The Company’s Articles prescribe that, at each AGM, one-third of the Directors shall retire from

office and may offer themselves for re-election. However, in line with best practice, the Board has

determined that all of the Directors should stand for re-election at each AGM.

On 4 December 2020 at the 15th AGM of the Company, both Nicholas Pink and Shelagh Mason

were elected as a Director, having been appointed as a Director since the previous AGM. Jill May,

Christopher Russell and David Staples retired as Directors of the Company and, being eligible, had

offered themselves for re-election, and were re-elected as Directors of the Company by the

Shareholders.

With effect from 4 December 2020, the date of the 15th AGM of the Company, Ashe Windham

retired as a Director and Christopher Russell replaced him as Chairman of the Board.

The Board remains satisfied that the individual contributions of each Director are, and will

continue to be, important to the Company’s long-term sustainable success. Accordingly, each of

the Directors will be proposed for re-election at the 16th AGM of the Company to be held on

3 December 2021. Further details regarding the experience of each of the Directors are set out on

pages 40 and 41.

The Directors may at any time appoint any person to be a Director either to fill a vacancy or as an

addition to the existing Directors. Any Director so appointed shall hold office only until, and shall

be eligible for election at, the next general meeting following their appointment but shall not be

taken into account in determining the Directors or the number of Directors who are to retire by

rotation at that meeting if it is an AGM.

Board evaluation

Towards the end of the financial year, the Board engaged Lintstock, a firm highly experienced in

conducting board evaluations, to facilitate an external evaluation of the Board, the Chairman and

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the Investment Manager. The Board evaluation considered a broad range of areas including; Board

composition and expertise, Board dynamics, the structure of the Board and its Committees, Board

oversight of investment strategy and performance, relations with shareholders, oversight of risk

management, succession planning and priorities for change during the forthcoming financial year.

The Investment Manager evaluation considered the success of the Company’s investment policy,

benchmarking against a peer group, the Investment Manager’s communication of strategy and

performance to the Board, shareholder perception of the Investment Manager and priorities for

change during the forthcoming financial year.

The results of the external evaluation were discussed at the Board meeting on 5 October 2021. The

Board was identified as a well-functioning body, and areas identified for further consideration

included: seeking deeper engagement with shareholders following the recent change of Chair and

SID; and ensuring effective face-to-face meetings between the Board and Investment Manager in

the post-covid-19 environment. The next externally facilitated Board evaluation will be conducted

in relation to the financial year ending 30 June 2024.

During the financial years where an external evaluation is not conducted, the Board conducts an

annual self-evaluation of its performance and that of the Company’s individual Directors, which is

led by the Chairman and, as regards the Chairman’s performance evaluation, by the Senior

Independent Director. The annual self-evaluation considers how the Board functions as a whole,

taking into account the balance of skills, experience and length of service of each Director, and also

reviews the individual performance of its members.

To facilitate the self-evaluation, the Company Secretary circulates a detailed questionnaire to each

Director and a separate questionnaire for the evaluation of the Chairman. The questionnaires, once

completed, are returned to the Company Secretary who collates responses, prepares a summary

and discusses the Board evaluation with the Chairman prior to circulation to the remaining Board

members. The performance of the Chairman is evaluated by the other Directors, led by the Senior

Independent Director.

The Board considers the annual self-evaluation process to be appropriate having regard to the

non-executive role of the Directors and the significant outsourcing of services by the Company to

external providers.

Board succession planning

The Board considers it has a breadth of experience relevant to the Company, and the Directors

believe that any changes to the Board’s composition can be managed without undue disruption. An

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induction programme is in place for all Director appointees. Any proposals for a new Director are

discussed and approved by the Board.

The Board’s succession planning policy seeks to ensure that the Board remains well balanced and

that the Directors have a sufficient level of skills, knowledge and experience to meet the needs of

the Company. The Directors are ever-cognisant of the need for the Board to have a balance of

gender and other attributes, including the requirement to appoint a majority of non-UK resident

Directors.

Mr Christopher Russell was appointed as Chairman of the Board following Mr Ashe Windham’s

retirement at the AGM of the Company held on 4 December 2020. The Board’s policy is that a

Director of the Company, who subsequently becomes Chairman, should serve for no more than a

total of 12 years.

Board diversity

The Board supports the recommendations of the Davies Report and notes the recommendations of

the Parker review into ethnic diversity and the Hampton-Alexander review on gender balance in

FTSE leadership. The Board supports the widening of its diversity, whilst ensuring the capabilities,

experience and background of each member remain appropriate to the Company and continue to

contribute to overall Board effectiveness.

Following the Board changes and Mr Windham’s retirement during 2020, the Board is 40%

female, thus meeting the Hampton-Alexander requirement that a Board should comprise at least

33% females.

Committees of the Board

The Board has established an Audit and Risk Committee and a Management Engagement

Committee and approved their terms of reference, copies of which can be obtained from the

Company Secretary upon request and on the Company’s website at ruffer.co.uk/ric.

The table on page 52 sets out the number of Committee meetings held during the year ended

30 June 2021 and the number of such meetings attended by each Committee member.

Audit and Risk Committee

The Company has established an Audit and Risk Committee, with formally delegated duties and

responsibilities within written terms of reference. The Audit and Risk Committee is comprised of

the entire Board and has been chaired by David Staples since 1 July 2018. The Audit and Risk

Committee meets formally at least three times a year and each meeting is attended by the

independent Auditor and Administrator.

A report of the Audit and Risk Committee detailing responsibilities and activities is presented on

pages 62 to 67.

Management Engagement Committee

The Company has established a Management Engagement Committee, with formally delegated

duties and responsibilities within written terms of reference. The Management Engagement

Committee is comprised of the entire Board, with Jill May appointed as Chairman. The

Management Engagement Committee meets annually in June each year and holds ad hoc meetings

to address any arising issues as required.

The principal duties of the Committee are to review the performance of and contractual

arrangements with the Investment Manager and all other service providers to the Company (other

than the independent Auditor).

During the year the Committee has reviewed the services provided by the Investment Manager and

other service providers, and recommended that the continuing appointments of the Company’s

service providers was in the best interests of the Company. The last meeting was held on 2 June

2021.

A report of the Management Engagement Committee detailing responsibilities and activities

during the year is presented on pages 68 to 69.

Nomination Committee

The Board does not have a separate Nomination Committee, the functions of which are fulfilled by

the Board. Any proposals for a new Director are discussed and approved by the Board. The Board

will determine whether an external search consultancy or open advertising is used in the

appointments of future non-executive Directors.

Remuneration Committee

In view of its non-executive and independent nature, the Board considers that it is not appropriate

to have a Remuneration Committee as anticipated by the UK Code because this function is carried

out as part of the regular Board business. A Remuneration report prepared by the Board is on

pages 60 to 61.

Internal control

The Company’s risk exposure and the effectiveness of its risk management and internal control

systems are reviewed by the Audit and Risk Committee at its meetings and annually by the Board.

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The Board is responsible for establishing and maintaining the Company’s system of internal

controls and for maintaining and reviewing its effectiveness. The system of internal controls is

designed to manage rather than to eliminate the risk of failure to achieve business objectives and

as such can only provide reasonable, but not absolute, assurance against material misstatement or

loss. These controls aim to ensure that assets of the Company are safeguarded, proper accounting

records are maintained and the financial information for publication is reliable. The Board uses a

formal risk assessment matrix to identify and monitor business risks.

The Board has contractually delegated to external parties various functions as listed below. The

duties of investment management, administration and custody are segregated. Each of the

contracts entered into with the parties was entered into after full and proper consideration by the

Board of the quality and cost of services offered, including the control systems in operation as far

as they relate to the affairs of the Company.

The Board considers on an ongoing basis the process for identifying, evaluating and managing any

significant risks faced by the Company. The process includes reviewing reports from the Company

Secretary on risk control and compliance, in conjunction with the Investment Manager’s regular

reports which cover investment performance.

Investment and portfolio risk management is provided by Ruffer AIFM Limited, a company

authorised by the FCA.

Administration, accounting, registrar, and company secretarial duties are performed by Praxis

Fund Services Limited, a company licensed and regulated by the Guernsey Financial Services

Commission.

CREST agency functions are performed by Computershare Investor Services (Jersey) Limited, a

company licensed and regulated by the Jersey Financial Services Commission.

Depositary services performed by Northern Trust (Guernsey) Limited, a company licensed and

regulated by the Guernsey Financial Services Commission.

Custodial services are provided by Northern Trust (Guernsey) Limited, a company licensed and

regulated by the Guernsey Financial Services Commission.

Sponsorship and brokering services are provided by Investec Bank plc (Investec), a firm which is

authorised and regulated by the FCA.

The Board reviews regularly the performance of the service companies. The Auditor is reviewed by

the Audit Committee and the other service providers by the Management Engagement Committee

(MEC) as described in the MEC report on page 68.

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The Board meets formally with the Investment Manager quarterly to review the performance of the

investments in the light of the Company’s investment objectives, and the Investment Manager’s

position against its peers. The Board also conducts an annual visit to the offices of Ruffer LLP to

meet with certain of the senior executives in the firm and to review such matters as its internal

control procedures; Ruffer’s business, product, marketing and personnel strategies, so far as they

affect the Company; portfolio risk analysis; integration of ESG into portfolio construction; and

cyber vulnerability. This visit took place online during the course of the financial year on

3 December 2020, but in person more recently on 4 October 2021.

The Board receives and reviews quarterly reports from the Investment Manager, the AIFM and the

Administrator. In May 2021, the Audit and Risk Committee conducted a review of the internal

controls of the Administrator, which was reported to the Board in June 2021. This included

meeting with key staff from each relevant department and confirmation from the Administrator of

its capability under its ISAE 3402 Type II audit report, as further disclosed in the report of the

Audit and Risk Committee on page 66. The Management Engagement Committee conducted an

annual review of all key service providers in June 2021, which was communicated to the Board,

and included a detailed assessment of their performance along with completion of questionnaires

by each service provider regarding key areas including their control environment, business

continuity and the impact of covid-19, cyber security arrangements and response to ESG, as

further disclosed in the Management Engagement Committee report on page 68.

In common with most investment companies, the Company does not have an internal audit

function. All of the Company’s management functions are delegated to the Investment Manager

and Administrator which have their own internal compliance and risk assessment functions. As

such, an internal audit function specific to the Company is therefore considered unnecessary, as

explained on page 58.

Principal risks and uncertainties

Principal risks and uncertainties are disclosed on page 16.

Anti-bribery and corruption

The Board acknowledges that the Company’s international operations may give rise to possible

claims of bribery and corruption. In consideration of The Bribery Act 2010, enacted in the UK, at

the date of this report the Board had conducted a review of the perceived risks to the Company

arising from bribery and corruption to identify aspects of business which may be improved to

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mitigate such risks. The Board has adopted a zero tolerance policy towards bribery and has

reiterated its commitment to carry out business fairly, honestly and openly.

Criminal Finances Act

The Board has a zero tolerance commitment to preventing persons associated with it from

engaging in criminal facilitation of tax evasion and will not work with any service provider who

does not demonstrate the same commitment. The Board has satisfied itself in relation to its key

service providers that they have reasonable provisions in place to prevent the criminal facilitation

of tax evasion by their own staff or any associated persons.

UK Modern Slavery Act

The Board acknowledges the requirement to provide information about human rights in

accordance with the UK Modern Slavery Act. The Board conducts the business of the Company

ethically and with integrity, and has a zero tolerance policy towards modern slavery in all its forms.

As the Company has no employees, all its Directors are non-executive and all its functions are

outsourced, there are no further disclosures to be made in respect of employees and human rights.

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Introduction

An ordinary resolution for the approval of the annual remuneration report was passed by

shareholders at the AGM held on 4 December 2020.

Remuneration policy

All Directors are non-executive and a Remuneration Committee has not been established. The

Board as a whole considers matters relating to the Directors’ remuneration. No advice or services

were provided by any external person in respect of its consideration of the Directors’

remuneration.

The Company’s policy is that the fees payable to the Directors should reflect the time spent by the

Directors on the Company’s affairs and the responsibilities borne by the Directors and be sufficient

to attract, retain and motivate directors of a quality required to run the Company successfully. The

Chairs of the Board and the Audit and Risk Committee and the SID are paid a higher fee in

recognition of their additional responsibilities. The policy is to review fee rates periodically,

although such a review will not necessarily result in any changes to the rates, and account is taken

of fees paid to directors of comparable companies.

There are no long term incentive schemes provided by the Company and no performance fees are

paid to Directors.

No Director has a service contract with the Company but each of the Directors is appointed by a

letter of appointment which sets out the main terms of their appointment. Directors hold office

until they retire or cease to be a director in accordance with the Articles of Incorporation or by

operation of law.

Remuneration

The Directors of the Company are remunerated for their services at such a rate as the Directors

determine provided that the aggregate amount of such fees does not exceed £200,000 (30 June

2020: £200,000) per annum.

Directors’ remuneration report

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Directors are remunerated in the form of fees, payable quarterly in arrears, to the Director

personally. The annual fees payable to each Director as at 30 June 2021 and 30 June 2020 are

shown below –

30 June 21 £ 30 June 20 £

Ashe Windham (Chairman until 4 December 2020) – 41,700

Christopher Russell (Chairman with effect from 4 December 2020) 44,550 29,500

Jill May (Senior Independent Director with effect from 4 December 2020

and Chair of Management Engagement Committee) 33,650 29,500

David Staples (Chair of Audit and Risk Committee) 36,250 33,950

Shelagh Mason 31,500 29,500

Nicholas Pink (appointed 1 September 2020) 31,500 –

During the year ended 30 June 2021, Directors’ fees of £178,702 (30 June 2020: £162,961) were

charged to the Company of which £nil remained payable at the year end (30 June 2020: £nil).

No additional remuneration has been paid to Directors outside their normal fees and expenses.

In February 2021, the Board reviewed the Directors’ fees against the Trust Associates NED fee

review and noted that the fees paid to the Directors were below the average for all UK investment

companies with market capitalisations over £500 million, and well below the equivalent fees paid

to directors of Channel Island companies. It was noted that during the Board recruitment process

conducted in the previous calendar year, a number of potential candidates had declined to

participate due to the level of directors’ fees being insufficient by market standards. The Board

resolved that the basic fee be increased by 6.8% in nominal terms (close to 4% in real terms)

effective 1 January 2021, with a view to further gradual increases towards the industry average

over subsequent years.

On the following pages, we present the Audit and Risk Committee’s report for the year ended 30

June 2021, setting out the responsibilities of the Committee and its key activities for the year from

1 July 2020 to 30 June 2021. As in previous years, the Committee has reviewed the Company’s

financial reporting, the independence and effectiveness of the Auditor and the internal control and

risk management systems of service providers. In order to assist the Committee in discharging

these responsibilities, regular reports are received from the Investment Manager, Administrator

and independent Auditor.

Members of the Committee will continue to be available at each AGM to respond to any

shareholder questions on its activities and reports.

Responsibilities

The Committee reviews and recommends to the Board the Financial Statements of the Company

and is the forum through which the independent Auditor reports to the Board of Directors.

The role of the Committee includes –

– monitoring and reporting to the Board on such matters as the integrity of the Financial

Statements of the Company and any formal announcements relating to the Company’s

financial performance, and any significant financial reporting judgements

– providing advice to the Board on whether the Financial Statements of the Company are fair,

balanced and understandable, and provide the information necessary for shareholders to

assess the Company’s position and performance

– considering the appropriateness of accounting policies and practices including critical

estimates and judgement areas

– reviewing and considering the AIC Code, the UK Code and FRC Guidance on Audit

Committees

– monitoring and reviewing the quality, effectiveness and independence of the Auditor and the

effectiveness of the audit process, considering and making recommendations to the Board on

the appointment, re-appointment, replacement and remuneration of the Company’s

independent Auditor

– developing and implementing policy on the engagement of the independent Auditor to provide

non-audit services

– reviewing the Company’s procedures for prevention, detection and reporting of fraud, bribery

and corruption

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Audit and Risk Committee report

– monitoring and reviewing the internal control and risk management systems of the service

providers

– considering the need for an internal audit function and

– reporting to the Board on how it has discharged its responsibilities.

The Committee’s full terms of reference are available on the Company’s website, ruffer.co.uk/ric.

Key activities

The following sections discuss the assessments made by the Committee during the year.

Financial reporting – the Committee’s review of the Unaudited Half Yearly Financial Report,

Unaudited Investment Manager’s Year End Review and the Annual Report and Audited Financial

Statements focused on the significant risk relating to the valuation and ownership of investments.

The investments comprise the majority of the Company’s NAV and hence form part of the Key

Performance Indicator (KPI) NAV per share. Hence any significant error in valuation or

misstatement of holdings could significantly impact the NAV and hence the reported NAV per

share of the Company.

Valuation of investments – the Company’s investments had a fair value of £516,760,500 as at

30 June 2021 (30 June 2020: £400,997,042) and represented the majority of the net assets of the

Company. The investments are predominantly listed except for investments in unlisted investment

funds.

The valuation of investments as at 30 June 2021 is in accordance with the requirements of IFRS.

The Committee considered the fair value of the investments held by the Company as at 30 June

2021 to be reasonable based on information provided by the Investment Manager and

Administrator. All prices are confirmed to independent pricing sources as at 30 June 2021 by the

Administrator and are subject to a review process at the Administrator and oversight at the

Investment Manager. We also note the work of the independent Auditor on these balances as set

out in their report on pages 72 to 81.

The Committee considered the classification of the Company’s investments within the levels of the

fair value hierarchy in accordance with the requirements of IFRS 9, most notably the classification

of the Company’s holding in the Ruffer Illiquid Multi-Strategies Fund, which represents

approximately 4.2% of the Company’s NAV. The Committee was comfortable that this investment

should be classified within Level 2 of the hierarchy, as the Investment Manager creates a market

for the shares as noted in note 19.

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Ownership of investments – the Company’s investment holdings are reconciled to independent

reports from the Custodian by the Administrator with any discrepancies being fully investigated

and reconciled by the Administrator. The Committee satisfied itself, based on reviews of

information provided by the Custodian, Depositary and Administrator, that the holdings of

investments are correctly recorded.

Investment income and realised and unrealised gains and losses on investments – the Committee

has considered the risk that these items may be materially mis-stated, which could impact the

reporting of the performance of the Company in any accounting period. The Committee is satisfied

that the controls around the recording and calculations for these items and the reconciliation of

cash and investment holdings are sufficiently robust to satisfactorily mitigate this risk.

Risk management – the Committee considered the process for managing the risk of the Company

and its service providers. Risk management procedures for the Company, as detailed in the

Company’s risk assessment matrix, were reviewed and approved by the Committee. Regular

reports are received from the Investment Manager and Administrator on the Company’s risk

evaluation process and reviews. Refer to the Business Model and Strategy on page 16 for details on

principal risks and uncertainties and their management. Financial risks faced by the Company are

discussed in note 19 of the Financial Statements on pages 104 to 117.

The Company’s AIFM, Ruffer AIFM Limited has responsibilities in law in relation to risk

management under the AIFMD.

Fraud, bribery and corruption – the Committee continues to monitor the fraud, bribery and

corruption policies of the Company. The Board receives a confirmation from all service providers

that there have been no instances of fraud, bribery or corruption.

The independent Auditor – in March 2015 the Board entered into a competitive audit tender

process and Deloitte LLP was appointed as the Company’s Auditor. The Company intends to

conduct a tender process at least every 10 years and to rotate auditors at least every 20 years, as

recommended by the UK Statutory Auditors and Third Country Auditors Regulations 2016.

Independence, objectivity and fees – the independence and objectivity of the Auditor is reviewed

by the Committee which also reviews the terms under which the independent Auditor is appointed

to perform non-audit services. The Committee has established pre-approval policies and

procedures for the engagement of Deloitte LLP to provide audit, assurance and tax services. These

are that the independent Auditor may not provide a service which –

– places them in a position to audit their own work

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– creates a mutuality of interest

– results in the independent Auditor developing close relationships with service providers of the

Company

– results in the independent Auditor functioning as a manager or employee of the Company or

– puts the independent Auditor in the role of advocate of the Company.

The Committee takes into account relevant ethical and regulatory guidance regarding the provision

of non-audit services by the Auditor, and will report to the Board to identify any matters in respect

of which it considers that action or improvement is needed, and to make recommendations as to

the steps to be taken. The Board maintains a non-audit services policy which is reviewed

periodically and is available on the Company’s website, ruffer.co.uk/ric.

The following table summarises the remuneration paid to the Auditor for audit and non-audit

services during the years ended 30 June 2021 and 2020.

30 June 21 £ 30 June 20 £

Statutory audit 37,500 35,850

Total audit fees 37,500 35,850

Interim review 8,500 8,400

Total non-audit related fees 8,500 8,400

No tax or other services were provided during the year.

Deloitte LLP also has safeguards in place to ensure objectivity and independence.

When considering the effectiveness and independence of the Auditor, and the effectiveness of the

audit process, the Committee meets regularly with the Auditor to discuss the audit plan and the

scope of the audit. The Committee also takes account of factors such as –

– the audit plan presented to them before each audit

– the post audit report including variations from the original plan

– changes in audit personnel

– the independent Auditor’s own internal procedures to identify threats to independence and

– feedback from both the Investment Manager and Administrator evaluating the performance of

the team.

The Committee has examined the scope and results of the audit, its cost effectiveness and the

independence and objectivity of the independent Auditor, with particular regard to non-audit fees,

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and is satisfied that an effective audit has been completed with diligence and professional

scepticism, that the scope of the audit was appropriate and significant judgements have been

challenged robustly. It also considers Deloitte LLP, as Auditor, to be independent of the Company.

Re-appointment of the independent Auditor – At the AGM held on 4 December 2020, Deloitte LLP

was re-appointed as the Company’s independent Auditor.

Internal control and risk management systems

The Committee discussed with the independent Auditor the risk of misstatement in the Financial

Statements arising from the potential for the Company’s key service providers, the Investment

Manager and Administrator, to override controls.

At each quarterly Board meeting, compliance reports are provided by the Administrator, Company

Secretary and Investment Manager. The Board also receives confirmation from the Administrator

of its capability under its ISAE 3402 Type II audit report. No significant failings or weaknesses

were identified in these reports.

During May 2021, members of the Committee visited the offices of the Administrator to conduct a

review of their internal control procedures, a report on which was provided to the Board in June

2021. During the visit, the Committee met with key staff from the Administrator to discuss the

internal controls in place within each of the departments which provides services to the Company

including; company secretarial, compliance, administration/valuation and financial reporting.

No significant issues were identified during the visit and the Committee confirmed that the

Administrator continues to have effective systems in place to control the risk associated with the

services that they are contracted to provide to the Company. The Committee has also reviewed the

need for an internal audit function. The Committee is satisfied that the systems and procedures

employed by the Investment Manager and the Administrator, including where relevant their

internal audit functions, provide sufficient assurance that a sound system of internal control is

maintained. An internal audit function specific to the Company is therefore considered

unnecessary.

For any questions on the activities of the Committee not addressed in the foregoing, members of

the Committee will attend each AGM to respond to such questions.

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In finalising the Financial Statements for recommendation to the Board for approval, the

Committee has satisfied itself that the Financial Statements taken as a whole are fair, balanced and

understandable, and provide the information necessary for shareholders to assess the Company’s

performance, business model and strategy.

David Staples

Chairman, Audit and Risk Committee

5 October 2021

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On the following pages, we present the Management Engagement Committee’s report for the year

ended 30 June 2021, setting out the responsibilities of the Committee and its key activities for the

year from 1 July 2020 to 30 June 2021. The Committee meets annually in June each year and

holds ad hoc meetings to address any arising issues as required.

Responsibilities

The formally delegated duties and responsibilities of the Management Engagement Committee are

set out in written terms of reference which are available from the Company Secretary upon request

and published on the Company’s website, ruffer.co.uk/ric. The Committee’s terms of reference are

reviewed on an annual basis.

The principal duties of the Management Engagement Committee are to review the performance of

and contractual arrangements with the Investment Manager and all other key service providers to

the Company, other than the independent Auditor which is reviewed by the Audit and Risk

Committee. In addition, the Management Engagement Committee is involved in monitoring and

reviewing the level of remuneration of the Investment Manager to ensure that it is appropriate,

competitive and sufficient to incentivise the Investment Manager.

Key activities

The Management Engagement Committee conducts an annual review of the performance of, and

contractual relationships with, the Company’s key service providers, including the Investment

Manager. To facilitate this review, the Company Secretary circulates two detailed questionnaires to

each service provider: one relating to an assessment of the services provided during the year, any

issues encountered and feedback on other service providers; and a second requesting details of the

service provider’s internal control systems, business continuity plans, impact of covid-19 on

business operations, succession planning and any key staff changes, ESG policies and cyber

security arrangements. In addition, qualitative feedback on the performance and operations of

each service provider is obtained from each of the Directors, the Investment Manager, the Broker

and the Company Secretary. The Company Secretary prepares a summary of responses received

which is presented to the Management Engagement Committee for their review.

The last Management Engagement Committee meeting was held on 2 June 2021 and no material

issues were identified as a result of the annual service provider review. Accordingly, the

Management Engagement Committee recommended to the Board that the retention of the

Company’s service providers was in the best interests of the Company and its shareholders.

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Management Engagement Committeereport

Towards the end of the financial year, the Board engaged Lintstock, a firm specialising in board

reviews, to facilitate an external evaluation of the Investment Manager, concurrent with an

external evaluation of the Board. The Investment Manager evaluation considered the success of the

Company’s investment policy, benchmarking against a peer group, the Investment Manager’s

communication of strategy and performance to the Board, shareholder perception of the

Investment Manager and priorities for change during the forthcoming financial year. The results of

the Board evaluation are discussed further in the corporate governance statement on page 54.

No material issues were identified during the Committee’s review of the Investment Manager and

the Board concluded that the Investment Manager had deep industry experience, an appropriate

investment strategy for the investment objectives of the Company and that the continued

appointment of the Investment Manager on the terms agreed, including management fees, was in

the best interests of the Company and its shareholders.

Jill May

Chairman, Management Engagement Committee

5 October 2021

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Northern Trust (Guernsey) Limited has been appointed as Depositary to Ruffer Investment

Company Limited (the ‘Company’) in accordance with the requirements of Article 36 and Articles

21(7), (8) and (9) of the Directive 2011/61/EU of the European Parliament and of the Council of

8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and

2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the ‘AIFM Directive’).

We have enquired into the conduct of Ruffer AIFM Limited (the ‘AIFM’) and the Company for the

year ended 30 June 2021, in our capacity as Depositary to the Company.

This report including the review provided below has been prepared for and solely for the

Shareholders in the Company. We do not, in giving this report, accept or assume responsibility for

any other purpose or to any other person to whom this report is shown.

Our obligations as Depositary are stipulated in the relevant provisions of the AIFM Directive and

the relevant sections of Commission Delegated Regulation (EU) No 231/2013 (collectively the

‘AIFMD legislation’) and the Authorised Closed-ended Investment Schemes Rules 2008.

Amongst these obligations is the requirement to enquire into the conduct of the AIFM and the

Company and their delegates in each annual accounting period.

Our report shall state whether, in our view, the Company has been managed in that period in

accordance with the AIFMD legislation. It is the overall responsibility of the AIFM and the

Company to comply with these provisions. If the AIFM, the Company or their delegates have not so

complied, we as the Depositary will state why this is the case and outline the steps which we have

taken to rectify the situation.

The Depositary and its affiliates are or may be involved in other financial and professional

activities which may on occasion cause a conflict of interest with its roles with respect to the

Company. The Depositary will take reasonable care to ensure that the performance of its duties

will not be impaired by any such involvement and that any conflicts which may arise will be

resolved fairly and any transactions between the Depositary and its affiliates and the Company

shall be carried out as if effected on normal commercial terms negotiated at arm’s length and in

the best interests of Shareholders.

Basis of Depositary Review

The Depositary conducts such reviews as it, in its reasonable discretion, considers necessary in

order to comply with its obligations and to ensure that, in all material respects, the Company has

been managed (i) in accordance with the limitations imposed on its investment and borrowing

powers by the provisions of its constitutional documentation and the appropriate regulations and

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Report of the depositary to the shareholders of

Ruffer Investment Company Limited

(ii) otherwise in accordance with the constitutional documentation and the appropriate

regulations. Such reviews vary based on the type of Fund, the assets in which a Fund invests and

the processes used, or experts required, in order to value such assets.

Review

In our view, the Company has been managed during the period, in all material respects –

– in accordance with the limitations imposed on the investment and borrowing powers of the

Company by the constitutional documents; and by the AIFMD legislation; and

– otherwise in accordance with the provisions of the constitutional documents; and the AIFMD

legislation.

For and on behalf of

Northern Trust (Guernsey) Limited

5 October 2021

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Report on the audit of the financial statements

1 Opinion

In our opinion the financial statements of Ruffer Investment Company Limited (the ‘Company’) –

– give a true and fair view of the state of the Company’s affairs as at 30 June 2021 and of its

profit for the year then ended

– have been properly prepared in accordance with International Financial Reporting Standards

(IFRSs) as adopted by the European Union and

– have been prepared in accordance with the requirements of the Companies (Guernsey) Law,

2008.

We have audited the financial statements which comprise –

– the Statement of financial position

– the Statement of comprehensive income

– the Statement of changes in equity

– the Statement of cash flows

– the related notes 1 to 21 and

– the Portfolio statement.

The financial reporting framework that has been applied in their preparation is applicable law and

IFRSs as adopted by the European Union.

2 Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))

and applicable law. Our responsibilities under those standards are further described in the

auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the Company in accordance with the ethical requirements that are relevant

to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the

FRC’s) Ethical Standard as applied to listed entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. The non-audit services provided to the

Company for the year are disclosed in note 9 to the financial statements. We confirm that the non-

audit services prohibited by the FRC’s Ethical Standard were not provided to the Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our opinion.

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Independent auditor’s report to the Members of

Ruffer Investment Company Limited

3 Summary of our audit approach

Key audit matters The key audit matter that we identified in the current year was

– Valuation and ownership of investments

Materiality The materiality that we used in the current year was £5.758 m which

was determined on the basis of 1% of net asset value (NAV) of the

Company as at 30 June 2021.

Scoping The Company was audited as a single component. Balances were

scoped in for testing based on our assessment of risk of material

misstatement. As part of our risk assessment process, we considered

the impact of relevant controls implemented at the service provider.

There have been no significant changes in our audit approach in the

current year audit.

4 Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going

concern basis of accounting in the preparation of the financial statements is appropriate.

Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going

concern basis of accounting included –

– evaluating the judgements and decisions made by management with regards to key forecasting

assumptions used in the going concern assessment

– assessing reasonableness of assumptions on cash flow forecasts for the next three years, used

in supporting the use of the going concern assumption and

– assessing the relevant disclosures in the financial statements.

Based on the work we have performed, we have not identified any material uncertainties relating

to events or conditions that, individually or collectively, may cast significant doubt on the

Company’s ability to continue as a going concern for a period of at least twelve months from when

the financial statements are authorised for issue.

In relation to the reporting on how the Company has applied the UK Corporate Governance Code,

we have nothing material to add or draw attention to in relation to the Directors’ statement in the

financial statements about whether the Directors considered it appropriate to adopt the going

concern basis of accounting.

Significant changes in

our approach

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Our responsibilities and the responsibilities of the Directors with respect to going concern are

described in the relevant sections of this report.

5 Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance

in our audit of the financial statements of the current period and include the most significant

assessed risks of material misstatement (whether or not due to fraud) that we identified. These

matters included those which had the greatest effect on: the overall audit strategy, the allocation of

resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole,

and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5.1 Valuation and ownership of investments

Included in the Company’s Statement of Financial Position as at

30 June 2021 are investments with a fair value of £517 million

(2020: £401 million) as disclosed in Note 10 to the financial

statements. The Company’s portfolio comprises equity investments,

index linked bonds and investment funds. Investments are key area

of focus to the users of the financial statements given that they are

the most quantitatively significant balance and main driver of the

Company’s performance and Net Asset Value. As explained in Note 2

(e), the Company’s accounting policy is to measure its investment at

fair value through profit and loss. Refer to consideration made by the

Audit Committee on valuation of investments discussed on page 63.

The identified risks were –

– there might be errors or fraudulent manipulation of valuation in

order to report favourable key performance indicators

– inappropriate exchange rates might be used to convert foreign

currency denominated investment to the Company’s reporting

currency

– trade made immediately before year-end might be excluded from

the valuation or conversely, trades made immediately after the

year end might be included in the valuation in error and

Key audit matter

description

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– the Company might not have legal title to the investment held at

year end.

To respond to the key audit matter, we have performed the following

audit procedures –

– obtained an understanding of relevant controls around the

valuation and ownership of investments and NAV preparation

process by the administrator

– agreed investments held as at year end to independently obtained

custodian confirmation

– assessed the reasonableness of exchange rates used in converting

investments denominated in currencies other than the pound

sterling (GBP) by comparing rates used to independent sources

– performed detailed testing on purchases and sales made around

year end to assess whether transactions had been recorded in the

correct period

– performed detailed testing through inspection of custodian trade

report for the year to assess the accuracy of investment purchases

and sales transactions and

– agreed the unit prices of all investments to independent pricing

sources.

Key observations Based on the results of procedures, we concluded that –

– the prices applied by management in the valuation of

investments are reasonable

– investment denominated in currencies other that pound sterling

(GBP) have been appropriately converted at appropriate spot rate

at year end

– the Company had proper legal title to the investments held at

year end and

– the investment transactions have been accounted for in the

correct accounting period.

How the scope of our

audit responded to the

key audit matter

6 Our application of materiality

6.1 Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it

probable that the economic decisions of a reasonably knowledgeable person would be changed or

influenced. We use materiality both in planning the scope of our audit work and in evaluating the

results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a

whole as follows –

Materiality

£5,758,000 (2020: £4,400,000)

Basis for determining materiality

1% (2020: 1%) of Net Asset Value

Rationale for the benchmark applied

Net Asset Value is the most appropriate benchmark as it is considered one of the principal drivers

for members of the Company in assessing financial performance and represents total shareholders’

interest.

6.2 Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in

aggregate, uncorrected and undetected misstatements exceed the materiality for the financial

statements as a whole. Performance materiality was set at 70% of materiality for the 2021 audit

(2020: 70%). In determining performance materiality, we considered the following factors –

Net Asset Value£575,851,333

Materiality£5,758,000

Audit Committeereporting threshold£287,900

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– our risk assessment, including our assessment of the Company’s overall control environment

and

– our past experience of the audit, which has indicated a low number of corrected and

uncorrected misstatements identified in prior periods.

6.3 Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences

in excess of £287,900 (2020: £222,200), as well as differences below that threshold that, in our

view, warranted reporting on qualitative grounds. We also report to the Audit Committee on

disclosure matters that we identified when assessing the overall presentation of the financial

statements.

7 An overview of the scope of our audit

7.1 Scoping

Our audit was scoped by obtaining an understanding of the Company and its environment,

including internal control, and assessing the risks of material misstatement. Audit work to respond

to the risks of material misstatement was performed directly by the audit engagement team.

7.2 Our consideration of the control environment

The Company is administered by a third party Guernsey regulated service provider. As part of our

audit, we obtained an understanding of relevant controls established at the service provider.

8 Other information

The other information comprises the information included in the Annual Report, other than the

financial statements and our auditor’s report thereon. The Directors are responsible for the other

information contained within the Annual Report.

Our opinion on the financial statements does not cover the other information and we do not

express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other

information is materially inconsistent with the financial statements or our knowledge obtained in

the audit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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9 Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement, the Directors are responsible

for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the Directors determine is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due to fraud

or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s

ability to continue as a going concern, disclosing as applicable, matters related to going concern

and using the going concern basis of accounting unless the directors either intend to liquidate the

Company or to cease operations, or have no realistic alternative but to do so.

10 Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a

whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on

the FRC’s website at frc.org.uk/auditorsresponsibilities. This description forms part of our

auditor’s report.

11 Extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We

design procedures in line with our responsibilities, outlined above, to detect material

misstatements in respect of irregularities, including fraud. The extent to which our procedures are

capable of detecting irregularities, including fraud is detailed below.

11.1 Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including

fraud and non-compliance with laws and regulations, we considered the following –

– the nature of the industry and sector, control environment and business performance

including the design of the Company’s remuneration policies

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– results of our enquiries of management and the Audit Committee about their own

identification and assessment of the risks of irregularities

– any matters we identified having obtained and reviewed the Company’s documentation of their

policies and procedures relating to –

– identifying, evaluating and complying with laws and regulations and whether they were

aware of any instances of non-compliance

– detecting and responding to the risks of fraud and whether they have knowledge of any

actual, suspected or alleged fraud

– the internal controls established to mitigate risks of fraud or non-compliance with laws and

regulations

– the matters discussed among the audit engagement team, including our financial instruments

specialists, regarding how and where fraud might occur in the financial statements and any

potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist

within the organisation for fraud and identified the greatest potential for fraud and identified the

greatest potential for fraud in the valuation and ownership of investments.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to

respond to the risk of management override.

We also obtained an understanding of the legal and regulatory framework that the Company

operates in, focusing on provisions of those laws and regulations that had a direct effect on the

determination of material amounts and disclosures in the financial statements. The key laws and

regulations we considered in this context included the Companies (Guernsey) Law, 2008, the

Listing Rules and relevant tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect

on the financial statements but compliance with which may be fundamental to the Company’s

ability to operate or to avoid a material penalty.

Audit response to risks identified

As a result of performing the above, we identified valuation and ownership of investments as a key

audit matter related to the potential risk of fraud. The key audit matters section of our report

explains the matter in more detail and also describes the specific procedures we performed in

response to that key audit matter.

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In addition to the above, our procedures to respond to risks identified included the following –

– reviewing the financial statement disclosures and testing to supporting documentation to

assess compliance with provisions of relevant laws and regulations described as having a direct

effect on the financial statements

– enquiring of management and the Audit Committee concerning actual and potential litigation

and claims

– performing analytical procedures to identify any unusual or unexpected relationships that may

indicate risks of material misstatement due to fraud

– reading minutes of meetings of the board and the Audit Committee and reviewing

correspondence with the Guernsey Financial Services Commission and

– in addressing the risk of fraud through management override of controls, testing the

appropriateness of journal entries and other adjustments; assessing whether the judgements

made in making accounting estimates are indicative of a potential bias; and evaluating the

business rationale of any significant transactions that are unusual or outside the normal course

of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all

engagement team members including financial instrument specialists, and remained alert to any

indications of fraud or non-compliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12 Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern,

longer-term viability and that part of the Corporate Governance Statement relating to the

Company’s compliance with the provisions of the UK Corporate Governance Code specified for our

review.

Based on the work undertaken as part of our audit, we have concluded that each of the following

elements of the corporate governance statement is materially consistent with the financial

statements and our knowledge obtained during the audit –

– the Directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified set out on page 17

– the Directors’ explanation as to its assessment of the Company’s prospects, the period this

assessment covers and why the period is appropriate set out on pages 17 to 18

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– the Directors’ statement on fair, balanced and understandable set out on pages 46 to 47

– the Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on page 16

– the section of the Annual Report that describes the review of effectiveness of risk management

and internal control systems set out on page 57 and

– the section describing the work of the Audit Committee.

13 Matters on which we are required to report by exception

13.1 Adequacy of explanations received and accounting records

Under the Companies (Guernsey) Law, 2008 we are required to report to you if, in our opinion –

– we have not received all the information and explanations we require for our audit

– proper accounting records have not been kept by the Company or

– the financial statements are not in agreement with the accounting records.

We have nothing to report in respect of these matters.

14 Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Section 262 of

the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state

to the Company’s members those matters we are required to state to them in an auditor’s report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the Company and the Company’s members as a body, for our

audit work, for this report, or for the opinions we have formed.

Nicola Sarah Paul FCA

For and on behalf of Deloitte LLP

Recognised Auditor

St Peter Port, Guernsey

5 October 2021

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Notes 30 June 21 £ 30 June 20 £

Assets

Non-current assets

Investments at fair value through profit or loss 10 516,760,500 400,997,042

Current assets

Cash and cash equivalents 55,833,380 42,667,336

Trade and other receivables 11 6,011,217 8,877,207

Derivative financial assets 18, 19 270,023 –

Total current assets 62,114,620 51,544,543

Total assets 578,875,120 452,541,585

Liabilities

Current liabilities

Trade and other payables 12 595,622 4,887,485

Derivative financial liabilities 18, 19 2,428,165 3,541,719

Total liabilities 3,023,787 8,429,204

Net assets 575,851,333 444,112,381

Equity

Capital and reserves attributable to the Company’s shareholders

Share capital 13 253,904,821 186,459,986

Capital reserve 220,493,564 158,853,795

Retained revenue reserve 6,403,389 3,749,041

Other reserves 95,049,559 95,049,559

Total equity 575,851,333 444,112,381

Net assets attributable to holders of redeemable

participating preference shares (per share) 14 2.8129 2.4565

The Financial Statements on pages 82 to 119 were approved on 5 October 2021 and signed on

behalf of the Board of Directors by

Christopher Russell David Staples

Chairman Director

Statement of financial position

as at 30 June 2021

The notes on pages 86 to 119 form an integral part of these Financial Statements.

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Year ended Year ended

Notes Revenue £ Capital £ 30 June 21 £ 30 June 20 £

Fixed interest income 1,234,890 – 1,234,890 1,159,039

Dividend income 5,971,289 – 5,971,289 3,649,428

Net changes in fair value of financial

assets at fair value through profit or loss 6 – 50,578,046 50,578,046 49,202,890

Other gains/(losses) 7 – 15,755,244 15,755,244 (7,835,401)

Total income 7,206,179 66,333,290 73,539,469 46,175,956

Management fees 8 – (4,693,521) (4,693,521) (3,921,402)

Expenses 9 (632,121) – (632,121) (633,225)

Total expenses (632,121) (4,693,521) (5,325,642) (4,554,627)

Profit for the year before tax 6,574,058 61,639,769 68,213,827 41,621,329

Withholding tax (424,880) – (424,880) (439,359)

Profit for the year after tax 6,149,178 61,639,769 67,788,947 41,181,970

Total comprehensive income for the year 6,149,178 61,639,769 67,788,947 41,181,970

Basic and diluted earnings per share 3.30p 33.13p 36.43p 22.78p

The revenue and capital return columns are prepared under guidance published by the Association

of Investment Companies. All revenue and capital items in the above statement derive from

continuing operations.

Basic and diluted earnings per share are calculated by dividing the profit after taxation by the

weighted average number of redeemable participating preference shares in issue during the year.

The weighted average number of shares for the year was 186,055,211 (30 June 2020: 180,788,416).

As there are no items which would cause a dilution to occur, the basic and diluted earnings per

share are the same.

Statement of comprehensive income

for the year ended 30 June 2021

The notes on pages 86 to 119 form an integral part of these Financial Statements.

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Retained Total yearShare Capital revenue Other ended

Notes capital £ reserve £ reserve* £ reserves* £ 30 June 21 £

Balance at 1 July 2020 186,459,986 158,853,795 3,749,041 95,049,559 444,112,381

Total comprehensive income

for the year – 61,639,769 6,149,178 – 67,788,947

Transactions with shareholders

Share capital issued 13 67,934,025 – – – 67,934,025

Share issue costs 13 (489,190) – – – (489,190)

Distributions during the year 5 – – (3,494,830) – (3,494,830)

Balance at 30 June 2021 253,904,821 220,493,564 6,403,389 95,049,559 575,851,333

Retained Total yearShare Capital revenue Other ended

Notes capital £ reserve £ reserve* £ reserves* £ 30 June 20 £

Balance at 1 July 2019 186,459,986 121,407,708 3,357,744 95,049,559 406,274,997

Total comprehensive income

for the year – 37,446,087 3,735,883 – 41,181,970

Transactions with shareholders

Distributions during the year 5 – – (3,344,586) – (3,344,586)

Balance at 30 June 2020 186,459,986 158,853,795 3,749,041 95,049,559 444,112,381

* Under The Companies (Guernsey) Law, 2008, the Company can distribute dividends from share capital and reserves, subject to satisfying a solvency test. However,

the Company’s dividend policy is that dividends will only be paid from accumulated revenue reserves. In order to provide clearer information relating to reserves

available for distribution, the Company has separately identified this reserve in these financial statements as a ‘Retained revenue reserve’ in the Statement of

Financial Position and the Statement of Changes in Equity. ‘Other reserves’ represents amounts converted from share premium in 2004 and 2008.

Statement of changes in equity

for the year ended 30 June 2021

The notes on pages 86 to 119 form an integral part of these Financial Statements.

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Year ended Year ended

Notes 30 June 21 £ 30 June 20 £

Cash flows from operating activities

Profit for the year after tax 67,788,947 41,181,970

Adjustments for

Net realised gains on investments 6 (38,668,618) (37,326,151)

Unrealised gains on investments 6 (11,909,428) (11,876,739)

Realised (gains)/losses on forward foreign exchange contracts 7 (14,377,597) 4,324,559

Unrealised (gains)/losses on forward foreign exchange contracts 7 (1,383,577) 3,209,682

Foreign exchange losses on cash and cash equivalents 7 5,930 301,160

Decrease/(increase) in trade and other receivables (excluding

amounts due in respect of the issue of redeemable participating

preference shares) 105,021 (321,573)

Increase/(decrease) in trade and other payables 108,137 (301,304)

1,668,815 (808,396)

Net cash received/(paid) on closure of forward foreign exchange

contracts 7 14,377,597 (4,324,559)

Purchases of investments (404,105,845) (351,393,055)

Sales of investments 338,567,277 383,463,252

Net cash (used in)/generated from operating activities (49,492,156) 26,937,242

Cash flow from financing activities

Dividends paid 5 (3,494,830) (3,344,586)

Proceeds from issue of redeemable participating preference shares 66,648,150 –

Share issue costs (489,190) –

Net cash generated from/(used in) financing activities 62,664,130 (3,344,586)

Net increase in cash and cash equivalents 13,171,974 23,592,656

Cash and cash equivalents at the beginning of the year 42,667,336 19,375,840

Foreign exchange losses on cash and cash equivalents 7 (5,930) (301,160)

Cash and cash equivalents at the end of the year 55,833,380 42,667,336

Statement of cash flows

for the year ended 30 June 2021

The notes on pages 86 to 119 form an integral part of these Financial Statements.

1 The Company

The Company was incorporated with limited liability in Guernsey on 1 June 2004 as a company

limited by shares and as an authorised closed-ended investment company. As an existing closed-

ended fund the Company is deemed to be granted an authorised declaration in accordance with

section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and rule

6.02 of the Authorised Closed-ended Investment Schemes Rules 2008. The Company is listed on

the Main Market of the London Stock Exchange (LSE) and was admitted to the premium segment

of the Official List of the UK Listing Authority on 20 December 2005.

The Company’s registered office is shown on page 126 and details of its investment objective and

strategy are shown on pages 12 to 13.

2 Significant accounting policies

a Statement of compliance

The Financial Statements of the Company for the year ended 30 June 2021 have been prepared in

accordance with International Financial Reporting Standards (IFRS) as adopted by the European

Union and the Listing Rules of the London Stock Exchange in compliance with the Companies

(Guernsey) Law, 2008.

b Basis of preparation

The Financial Statements are prepared in pound sterling (£), which is the Company’s functional

and presentation currency. The Financial Statements have been prepared on a going concern basis

under the historical cost convention, as modified by the revaluation of financial assets and

financial liabilities at fair value through profit or loss.

c Going concern

The Directors believe that it is appropriate to continue to adopt the going concern basis in

preparing the Financial Statements since the assets of the Company consist mainly of cash and

cash equivalents and securities which are readily realisable. The Directors also note that overall,

due to the nature of the Company’s portfolio, which comprises both equities and other more

defensive assets, it has not been affected significantly in terms of value or cashflows by the effects

of the covid-19 pandemic. Accordingly, in the Directors’ opinion, the Company has adequate

financial resources to continue in operational existence for the foreseeable future. Matters relating

to the going concern status of the Company are also discussed in the long-term viability statement

on pages 17 to 18.

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Notes to the Financial Statementsfor the year ended 30 June 2021

d New accounting standards and amendments effective and adopted

The following amended standards have been adopted in these Financial Statements

– IFRS 7 (‘Financial Instruments: Disclosures’), IFRS 9 (‘Financial Instruments’) and IAS 39

(‘Financial Instruments: Recognition and measurement’) (amendments effective for periods

commencing on or after 1 January 2020)

– IAS 1 (‘Presentation of Financial Statements’) and IAS 8 (‘Accounting Policies, Changes in

Accounting Estimates & Errors’) (amendments effective for periods commencing on or after

1 January 2020)

The amendments to IFRS 7, IFRS 9 and IAS 39 related to the IASB publication ‘Amendments

regarding pre-replacement issues in the context of the IBOR reform’, published in September

2019.

The amendments to IAS 1 and IAS 8 related to the IASB publication ‘Definition of Material

(Amendments to IAS 1 and IAS 8)’, published in October 2018, which has clarified the definition of

‘material’ and aligned the definition used in the Conceptual Framework and the standards.

In addition, the IASB published ‘Amendments to References to the Conceptual Framework in IFRS

standards’ in March 2018, which updated certain Standards and Interpretations with regard to

references to and quotes from the Framework or to indicate where they refer to a different version

of the Conceptual Framework, effective for accounting periods commencing on or after 1 January

2020.

In the opinion of the Directors, the adoption of these new and amended standards has had no

material impact on the Financial Statements of the Company.

Standards and amendments in issue but not yet effective

The following standards, which have not been applied in these Financial Statements, were in issue

at the reporting date but not yet effective –

– IAS 1 (amended), ‘Presentation of Financial Statements’ – (effective for accounting periods

commencing on or after 1 January 2023)

– IAS 8 (amended), ‘Accounting Policies, Changes in Accounting Estimates and Errors’ –

(effective for accounting periods commencing on or after 1 January 2023)

– IAS 37 (amended), ‘Provisions, Contingent Liabilities and Contingent Assets’ – (effective for

accounting periods commencing on or after 1 January 2022)

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The amendments to IAS 1 were published in January 2020 and relate to the classification of

liabilities.

The amendments to IAS 8 were published in February 2021 and clarify how companies should

distinguish changes in accounting policies from changes in accounting estimates.

The amendments to IAS 37 were published in May 2020 and relate to the costs to include when

assessing whether a contract is onerous.

In addition, the IASB has issued the following publication –

‘Annual Improvements to IFRS Standards 2018-2020’, published in May 2020, which has

amended certain existing standards, effective for accounting periods commencing on or after

1 January 2022.

The changes arising from the amendments to these standards are either presentational and/or

minor in nature. It is therefore anticipated that the adoption of these amended standards will have

no material impact on the Financial Statements of the Company.

e Financial instruments

i Classification

Financial assets are classified into the following categories: financial assets at fair value through

profit or loss and financial assets at amortised cost.

The classification depends on the nature and purpose of the financial assets and is determined at

the time of initial recognition.

The Company’s financial assets at fair value through profit or loss comprise investment assets and

derivative assets in the form of forward foreign currency exchange contracts.

The Company’s financial assets at amortised cost comprise trade and other receivables and cash

and cash equivalents.

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or

financial liabilities at amortised cost.

The Company’s financial liabilities at fair value through profit or loss comprise derivative liabilities

in the form of forward foreign currency exchange contracts.

The Company’s financial liabilities at amortised cost comprise trade and other payables.

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ii Investments at fair value through profit or loss (‘investments’)

Recognition

Investments are recognised in the Company’s Statement of Financial Position when the Company

becomes a party to the contractual provisions of the instrument.

Purchases and sales of investments are recognised on the trade date (the date on which the

Company commits to purchase or sell the investment). Investments purchased are initially

recorded at fair value, being the consideration given, including transaction or other dealing costs

associated with the investment.

Measurement

Subsequent to initial recognition, investments are measured at fair value. Gains and losses arising

from changes in the fair value of investments and gains and losses on investments that are sold are

recognised through profit or loss in the Statement of Comprehensive Income within net changes in

fair value of financial assets at fair value through profit or loss.

Investments traded in active markets are valued at the latest available bid prices ruling at midnight

on the reporting date. The Directors are of the opinion that the bid-market prices are the best

estimate of fair value. Investments consist of listed or quoted equities or equity-related securities,

options and bonds which are issued by corporate issuers, supra-nationals or government

organisations, and investment in funds.

Shares in some investment funds are not listed on an actively traded exchange and these are

valued on the reporting date at the latest estimate of NAV from the administrator of the respective

investment funds as the most recent price is the best estimate of the amount for which holdings

could have been disposed of at the reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date. Gains and losses arising

from changes in the fair value of financial assets/(liabilities) are shown as net gains or losses on

financial assets through profit or loss (see note 10) and recognised in the Statement of

Comprehensive Income in capital in the period in which they arise.

Realised gains and losses arising on disposal of investments are calculated by reference to the

proceeds received on disposal and the average cost attributable to those investments, and are

recognised in the Statement of Comprehensive Income. Unrealised gains and losses on

investments are recognised in the Statement of Comprehensive Income in capital.

iii Derivatives

Forward foreign currency contracts are treated as derivative contracts and as such are recognised

at fair value on the date on which they are entered into and subsequently remeasured at their fair

value. Fair value is determined by rates in active currency markets. All derivatives are carried as

assets when fair value is positive and as liabilities when fair value is negative. The gain or loss on

remeasurement to fair value is recognised immediately through profit or loss in the Statement of

Comprehensive Income within other gains in the period in which they arise.

iv Financial instruments at amortised cost

Trade and other receivables

Trade and other receivables are amounts due in the ordinary course of business and are classified

as current assets if collection is expected in one year or less. If not, they are presented as non-

current assets. Trade and other receivables are recognised initially at fair value and subsequently

measured at amortised cost using the effective interest method, less provision for impairment,

such impairment to be determined using the simplified expected credit losses approach in

accordance with IFRS 9.

Cash and cash equivalents

Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid

investments with original maturities of three months or less and bank overdrafts.

Trade and other payables

Trade and other payables are obligations to pay for services that have been acquired in the

ordinary course of business and are classified as current liabilities if payment is due within one

year or less. If not, they are presented as non-current liabilities. Trade and other payables are

recognised initially at fair value plus any directly attributable incremental costs of acquisition or

issue and subsequently measured at amortised cost using the effective interest rate method.

v Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the Statement of

Financial Position if, and only if, there is a currently enforceable legal right to offset the recognised

amounts and there is an intention to settle on a net basis, or to realise assets and settle the

liabilities simultaneously.

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vi Derecognition of financial instruments

A financial asset is derecognised when: (a) the rights to receive cash flows from the asset have

expired, (b) the Company retains the right to receive cash flows from the asset, but has assumed an

obligation to pay them in full without material delay to a third party under a ‘pass through

arrangement’; or (c) the Company has transferred substantially all the risks and rewards of the

asset, or has neither transferred nor retained substantially all the risks and rewards of the asset,

but has transferred control of the asset. A financial liability is derecognised when the obligation

under the liability is discharged, cancelled or expired.

f Income

The Company has no income that falls within the scope of IFRS 15, therefore all income is

recognised in accordance with IFRS 9. Dividend income from equity investments is recognised

when the relevant investment is quoted ex-dividend, and is included gross of withholding tax.

Interest income is recognised for all debt instruments using the effective interest rate method.

Dividend and interest income are recognised through profit or loss in the Statement of

Comprehensive Income in revenue.

g Expenses

Expenses are accounted for on an accruals basis and are recognised through profit or loss in the

Statement of Comprehensive Income in either capital or revenue reserves. The Company’s

management fees are allocated between capital and revenue in a ratio determined by the Board at

its sole discretion. Currently 100% of the management fees are charged to capital. All other

expenses of the Company are recognised in revenue.

Transaction costs on the purchases of investments are capitalised to the cost of the investments,

and transaction costs on the sales of investments are recognised in gains/(losses) on disposal of

investments.

h Translation of foreign currency

Functional and presentation currency

The Financial Statements of the Company are presented in the currency of the primary economic

environment in which the Company operates (its ‘functional currency’). The Directors have

considered the currency in which the original capital was raised, distributions will be made and

ultimately the currency in which capital would be returned in a liquidation. On balance, the

Directors believe that pound sterling best represents the functional currency of the Company. For

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the purpose of the Financial Statements, the results and financial position of the Company are

expressed in pound sterling, which is the presentation currency of the Company.

Foreign currency transactions are translated into the functional currency using the exchange rate

prevailing at the transaction date. Foreign exchange gains and losses resulting from the settlement

of such transactions and those from the translation at period end exchange rates of monetary

assets and liabilities denominated in foreign currencies are recognised in the Statement of

Comprehensive Income.

Translation differences on non-monetary items such as financial assets held at fair value through

profit or loss are reported as part of net changes in fair value on financial assets through profit or

loss in the Statement of Comprehensive Income.

i Share issue costs

Share issue costs are fully written off against the share capital account in the period of the share

issue in accordance with Guernsey company law.

j Redeemable participating preference shares

As the Company’s redeemable participating preference shares are redeemable at the sole option of

the Directors, they are required to be classified as equity instruments.

3 Significant accounting judgements, estimates and assumptions

The preparation of the Financial Statements in conformity with IFRS requires management to

make judgements, estimates and assumptions that affect the application of policies and the

reported amounts of assets and liabilities, income and expense and the accompanying disclosures.

Uncertainty about these assumptions and estimates could result in outcomes that require a

material adjustment to the carrying amount of assets or liabilities affected in future periods.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimate is revised if the revision

affects only that period, or in the period of revision and future periods if the revision affects both

current and future periods.

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Judgements

In the process of applying the Company’s accounting policies, management has made the following

judgement –

Fair value levelling

The Company allocates its financial instruments into levels of the fair value hierarchy, in

accordance with the requirements of IFRS 9. For details of how these allocations are determined,

please refer to note 19.

Estimates

The Company records its investments and derivatives at fair value. Details of the valuation

methodologies applied in determining the fair value of the Company’s investments are disclosed in

note 19. The fair values of forward foreign exchange contracts are determined with reference to

prevailing exchange rates. The Directors consider that these valuations represent the best estimate

of the fair values of the Company’s investments and derivatives.

4 Taxation

The Company has been granted Exempt Status under the terms of The Income Tax (Exempt

Bodies) (Guernsey) Ordinance, 1989 to income tax in Guernsey. Its liability is an annual fee of

£1,200 (30 June 2020: £1,200).

The amounts disclosed as taxation in the Statement of Comprehensive Income relate solely to

withholding tax deducted at source on income.

5 Dividends to shareholders

Dividends, if any, are declared semi-annually, usually in September and March each year. The

Company paid and declared the following dividends during the year –

Year ended Year ended

30 June 21 £ 30 June 20 £

2020 Second interim dividend of 0.95p (2019: 0.9p) 1,717,491 1,627,095

2021 First interim dividend of 0.95p (2020: 0.95p) 1,777,339 1,717,491

3,494,830 3,344,586

A second interim dividend of 1.55 pence per share in respect of the year ended 30 June 2021 was

declared on 5 October 2021. The dividend is payable on 29 October 2021 to shareholders on record

at 15 October 2021.

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6 Net changes in financial assets at fair value through profit or loss

Year ended Year ended

30 June 21 £ 30 June 20 £

Gains realised on investments sold during the year 46,640,900 60,136,847

Losses realised on investments sold during the year (7,972,282) (22,810,696)

Net realised gains/(losses) on investments sold during the year (see note 10) 38,668,618 37,326,151

Movement in unrealised gains arising from changes in fair value 11,909,428 11,876,739

Net changes in fair value on financial assets at fair value through profit or loss 50,578,046 49,202,890

7 Other gains/(losses)

Year ended Year ended

30 June 21 £ 30 June 20 £

Movement in unrealised gains/(losses) on spot and forward foreign exchange

currency contracts 1,383,577 (3,209,682)

Realised gains/(losses) on spot and forward foreign currency contracts 14,377,597 (4,324,559)

Other realised and unrealised foreign exchange losses (5,930) (301,160)

15,755,244 (7,835,401)

8 Management fees

The management fees were charged to the capital reserves of the Company. The management fees

for the year, including outstanding balances at end of the year, are detailed below.

Year ended Year ended

30 June 21 £ 30 June 20 £

Management fees for the year 4,693,521 3,921,402

Management fees payable at the end of the year 502,316 375,692

The basis for calculating the management fees is set out in the General Information on page 124.

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9 Expenses

Year ended Year ended

30 June 21 £ 30 June 20 £

Administration fee* 174,428 161,174

Directors’ fees 178,702 162,961

Custodian and Depositary fees* 84,922 79,610

Broker’s fees 35,632 35,009

Audit fee 37,500 33,304

Auditor’s remuneration for interim review 8,500 8,400

Legal and professional fees 32,500 49,325

Registrar fees 39,568 32,537

General expenses 40,369 70,905

632,121 633,225

*The basis for calculating the Administration fees, Custodian and Depositary fees is set out in the General Information on page 124.

All expenses were charged to revenue.

Ongoing charges ratio

The ongoing charges ratio (OCR) of an investment company is the annual percentage reduction in

shareholder returns as a result of recurring operational expenditure. Ongoing charges are

classified as those expenses which are likely to recur in the foreseeable future, and which relate to

the operation of the company, excluding investment transaction costs, financing charges and gains

or losses on investments. The OCR is calculated as the total ongoing charges for a period divided

by the average net asset value over that period.

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Year ended Year ended

30 June 21 £ 30 June 20 £

Management fee (see note 8) 4,693,521 3,921,402

Other expenses (see above) 632,121 633,225

5,325,642 4,554,627

Excluded expenses* (18,794) (41,000)

Total ongoing expenses 5,306,848 4,513,627

Average NAV 493,858,553 419,384,091

Ongoing charges ratio (using AIC methodology) 1.08% 1.08%

* Current year excluded expenses comprises fees relating to an EGM of the Company held during the year. Prior year excluded expenses principally comprised

consultancy costs relating to Board recruitment.

10 Investment assets at fair value through profit or loss

Year ended Year ended

30 June 21 £ 30 June 20 £

Cost of investments at the start of the year 350,041,991 351,139,573

Acquisitions at cost during the year 399,705,845 353,038,268

Disposals during the year (334,520,433) (391,462,001)

Gains on disposals during the year 38,668,618 37,326,151

Cost of investments held at the end of the year 453,896,021 350,041,991

Fair value above cost 62,864,479 50,955,051

Fair value of investments held at the end of the year 516,760,500 400,997,042

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11 Trade and other receivables

30 June 21 £ 30 June 20 £

Amounts receivable within one year

Investment income receivable 271,410 316,231

Fixed interest income receivable 419,384 456,357

Sales of investments awaiting settlement 4,026,553 8,073,397

Proceeds receivable from the issue of redeemable participating

preference shares 1,285,875 –

Other receivables 1,016 23,498

Prepayments 6,979 7,724

6,011,217 8,877,207

The Directors consider that the carrying amounts of trade and other receivables approximate to

their fair value.

12 Trade and other payables

30 June 21 £ 30 June 20 £

Amounts falling due within one year

Purchases of investments awaiting settlement – 4,400,000

Management fees payable 502,316 375,692

Other payables 93,306 111,793

595,622 4,887,485

The Directors consider that the carrying amounts of trade and other payables approximate to their

fair value.

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13 Share capital

30 June 21 £ 30 June 20 £

Authorised share capital

Unlimited unclassified shares of 0.01p each Unlimited Unlimited

75,000,000 C shares of 0.1p each 75,000 75,000

Unlimited Unlimited

The Company’s share capital comprises 75,000,000 C shares of 0.1p each, and an unlimited

number of unclassified shares of 0.01p each.

Number of shares Share capital–––––––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––––––

Year ended Year ended Year ended Year ended

30 June 21 £ 30 June 20 £ 30 June 21 £ 30 June 20 £

Issued share capital

Redeemable participating preference

shares of 0.01p each

Balance at the start of the year 180,788,416 180,788,416 186,459,986 186,459,986

Issued and fully paid during the year 23,930,000 – 67,934,025 –

Share issue costs – – (489,190) –

Balance at the end of the year 204,718,416 180,788,416 253,904,821 186,459,986

Unclassified shares

Unclassified shares can be issued as nominal shares or redeemable participating preference shares.

Nominal shares can only be issued at par to the Administrator. The Administrator is obliged to

subscribe for nominal shares for cash at par when redeemable participating preference shares are

redeemed to ensure that funds are available to redeem the nominal amount paid up on redeemable

participating preference shares. The holder or holders of nominal shares shall have the right to

receive notice of and to attend general meetings of the Company but shall not be entitled to vote

thereat. Nominal shares shall carry no right to dividends. In a winding-up, holders of nominal

shares shall be entitled to be repaid an amount equal to their nominal value out of the assets of the

Company.

The holders of fully paid redeemable participating preference shares are entitled to one vote at all

meetings of the relevant class of shareholders.

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C shares

There were no C Shares in issue at year end (30 June 2020: Nil).

Block listing and additional shares issued

As at 30 June 2020, the Company had the ability to issue 6,321,341 redeemable participating

preference shares under a block listing facility. On 3 March 2021, the Company announced that an

application had been made for the block listing of an additional 11,757,500 redeemable

participating preference shares, with an admission date of 4 March 2021. At an EGM held on

7 May 2021, a resolution was approved by shareholders empowering the Directors to issue an

additional 19,546,841 redeemable participating preference shares, being 10% of the equity

securities in issue at the latest practicable date prior to the EGM notice, excluding shares held in

treasury for cash and pursuant to Article 7(2)(G) of the Articles. The rights under Article 7 (2)

(B) were thereby excluded. During the year, 23,930,000 new redeemable participating preference

shares were allotted or issued under the block listing facility (30 June 2020: no redeemable

participating preference shares issued). New redeemable participating preference shares rank pari

passu with the existing shares in issue. As at 30 June 2021, the Company had the ability to issue

13,695,682 redeemable participating preference shares under the block listing facility. At an EGM

held on 27 September 2021, a resolution was approved by shareholders empowering the Directors

to issue a further 21,684,841 redeemable participating preference shares, being 10% of the equity

securities in issue at the latest practicable date prior to the EGM notice.

Redeemable participating preference shares in issue

As at 30 June 2021, the Company had 204,718,416 (30 June 2020: 180,788,416) redeemable

participating preference shares of 0.01 pence each in issue. Therefore, the total voting rights in the

Company at 30 June 2021 were 204,718,416 (30 June 2020: 180,788,416). Subsequent to the year

end, the Company has issued a further 14,695,000 redeemable participating preference shares at

an average issue price of £2.8634.

Purchase of own shares by the Company

A special resolution was passed on 4 December 2020 which authorised the Company in accordance

with The Companies (Guernsey) Law, 2008 to make purchases of its own shares as defined in that

Ordinance of its Participating Shares of 0.01 pence each, provided that

a the maximum number of shares the Company can purchase is no more than 14.99% of the

Company’s issued share capital

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b the minimum price (exclusive of expenses) which may be paid for a share is 0.01 pence,

being the nominal value per share

c the maximum price (exclusive of expenses) which may be paid for the share is an amount

equal to the higher of (i) 105% of the average of the middle market quotations for a share

taken from the LSE Daily Official List for the 5 business days immediately preceding the day

on which the Share is purchased and (ii) the price stipulated in Article 5(i) of the Buy-back

and Stabilisation Regulation (No 2237 of 2003)

d purchases may only be made pursuant to this authority if the shares are (at the date of the

proposed purchase) trading on the LSE at a discount to the lower of the undiluted or diluted

NAV

e the authority conferred shall expire at the conclusion of the Annual General Meeting of the

Company in 2021 or, if earlier, on the expiry of 15 months from the passing of this

resolution, unless such authority is renewed prior to such time and

f the Company may make a contract to purchase shares under the authority hereby conferred

prior to the expiry of such authority which will or may be executed wholly or partly after the

expiration of such authority and may make an acquisition of shares pursuant to any such

contract.

14 NAV reconciliation

The Company announces its NAV, based on bid value, to the LSE after each weekly and month end

valuation point. At the time of releasing the year end NAV to the LSE, not all 30 June prices of the

Company’s investments may be available. Adjustments are made to the NAV in the Financial

Statements once these prices become available. The following is a reconciliation of the NAV and

NAV per share attributable to redeemable participating preference shareholders as presented in

these Financial Statements to the NAV and NAV per share reported to the LSE.

30 June 21 30 June 20–––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––––

NAV per NAV per

NAV £ share £ NAV £ share £

NAV published on the LSE as at the year end 575,913,008 2.8132 444,397,682 2.4581

Adjustments to valuations (61,675) (0.0003) (285,301) (0.0016)

Net assets attributable to holders of

redeemable participating preference shares 575,851,333 2.8129 444,112,381 2.4565

15 Contingent liabilities

There were no contingent liabilities as at 30 June 2021 (30 June 2020: £Nil).

16 Related party transactions

The Directors are responsible for the determination of the investment policy of the Company and

have overall responsibility for the Company’s activities, and are therefore regarded as related

parties.

Investment Management Agreement

The Company is managed by Ruffer AIFM Ltd, a subsidiary of Ruffer LLP, a privately owned

business registered in England and Wales as a limited liability partnership. The Company and the

Investment Manager have entered into an Investment Management Agreement under which the

Investment Manager has been given responsibility for the day-to-day discretionary management of

the Company’s assets (including uninvested cash) in accordance with the Company’s investment

objective and policy, subject to the overall supervision of the Directors and in accordance with the

investment restrictions in the Investment Management Agreement and the Articles.

The market value of LF Ruffer Gold is deducted from the NAV of the Company before the

calculation of management fees on a monthly basis, as the Investment Manager separately earns a

management fee from that entity. For additional information, refer to the Portfolio Statement on

pages 120 to 123. Management fees for the year and payable at the end of the year are disclosed in

note 8.

Shares held in Ruffer Management Limited (RML), the Managing Member of Ruffer LLP

As at 30 June 2020, an immediate family member of the then Chairman Ashe Windham owned

100 shares in RML, the Managing Member of Ruffer LLP, which is the parent entity of the

Investment Manager of the Company. This amounted to less than 1% of RML’s issued share

capital. As at 30 June 2021, Ashe Windham is no longer a member of the Company’s Board of

Directors.

Directors’ remuneration

Directors’ remuneration is set out in the Directors’ Remuneration Report on page 61 of the

Financial Statements.

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Shares held by related parties

As at 30 June 2021, Directors of the Company held the following numbers of shares beneficially –

Shares 30 June 21 30 June 20

Ashe Windham* na 180,000

Christopher Russell 100,000 75,000

David Staples 80,000 80,000

Jill May 11,000 11,000

Shelagh Mason 11,325 –

Nicholas Pink 36,023 na

238,348 346,000

* Ashe Windham held 135,000 shares and his wife held 45,000 shares

As at 30 June 2021, Hamish Baillie, Investment Director of the Investment Manager owned

205,000 (30 June 2020: 205,000) shares in the Company.

As at 30 June 2021, Duncan MacInnes, Investment Manager of the Investment Manager owned

43,100 (30 June 2020: 43,100) shares in the Company.

As at 30 June 2021, Jonathan Ruffer, chairman of Ruffer LLP (the parent entity of the Company’s

Investment Manager), owned 1,039,335 (30 June 2020: 1,039,335) shares in the Company.

As at 30 June 2021, Ruffer LLP and other entities within the Ruffer Group held 5,633,800

(30 June 2020: 6,896,028) shares in the Company on behalf of its discretionary clients.

Investments in related funds

As at 30 June 2021, the Company held investments in four (30 June 2020: four) related

investment funds valued at £86,021,056 (30 June 2020: £91,153,877). Refer to the Portfolio

Statement on pages 120 to 123 for details.

17 Operating segment reporting

The Board of Directors makes the strategic decisions on behalf of the Company. The Company has

determined the operating segments based on the reports reviewed by the Board, which are used to

make strategic decisions.

The Board is responsible for monitoring the Investment Manager’s positioning of the Company’s

portfolio and considers the business to have a single operating segment.

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There were no changes in the reportable segments during the year.

Revenue earned is reported separately in the Statement of Comprehensive Income as dividend

income received from equities, and interest income received from fixed interest securities and

bank deposits.

The Statement of Cash Flows separately reports cash flows from operating and financing activities.

18 Financial instruments

In accordance with its investment objectives and policies, the Company holds financial

instruments which at any one time may comprise the following

– securities held in accordance with the investment objectives and policies

– cash and short-term receivables and payables arising directly from operations

– derivative transactions including investment in forward foreign currency contracts and

– borrowing up to a maximum of 30% of the NAV of the Company.

Terms, conditions and accounting policies

The financial instruments held by the Company comprise principally internationally listed or

quoted equities or equity related securities (including convertibles), and/or bonds which are issued

by corporate issuers, supra-nationals or government organisations.

Details of the significant accounting policies and methods adopted, including the criteria for

recognition, the basis of measurement and the basis on which income and expenses are

recognised, in respect of its financial assets and liabilities are disclosed in note 2. The following

table analyses the carrying amounts of the financial assets and liabilities by category as defined in

IFRS 9.

104

The following are the categories of financial instruments held by the Company at the reporting

date.

30 June 21 30 June 20

Fair value £ Fair value £

Financial assets

Financial assets at fair value through profit or loss

Listed securities 466,574,640 365,857,649

Unlisted securities – 1,593,750

UCITS funds 43,088,860 33,545,643

Derivative financial assets 270,023 –

Financial assets at amortised cost

Cash and cash equivalents 55,833,380 42,667,336

Trade and other receivables 6,011,217 8,869,483

578,868,141 452,533,861

Financial liabilities

Financial liabilities at fair value through profit or loss

Derivative financial liabilities 2,428,165 3,541,719

Financial liabilities at amortised cost

Trade and other payables 595,622 4,887,485

3,023,787 8,429,204

19 Financial risk management and associated risks

The Company is exposed to a variety of financial risks as a result of its activities. These risks

include market risk (including price risk, foreign currency risk and interest rate risk), credit risk

and liquidity risk. These risks, which have applied throughout the year and the Investment

Manager’s policies for managing them are summarised as follows:

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in market prices. The Company’s activities expose it primarily to the

market risks of changes in market prices, interest rates and foreign currency exchange rates.

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Market price risk

Market price risk arises mainly from the uncertainty about future prices of the financial

instruments held by the Company. It represents the potential loss the Company may suffer

through holding market positions in the face of price movements.

The Company’s investment portfolio is exposed to market price fluctuations which are monitored

by the Investment Manager in pursuance of the investment objectives and policies. Adherence to

investment guidelines and to investment and borrowing powers set out in the Placing and Offer for

Subscription document mitigates the risk of excessive exposure to any particular type of security or

issuer.

Market price sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to equity, investment

funds and bond price risks at the reporting date. The 20% reasonably possible price movement for

equity-related securities and investment funds (30 June 2020: 20%) is based on the Investment

Manager’s best estimates. The sensitivity rate for equity-related investments of 20% is regarded as

reasonable, as in the Investment Manager’s view there continues to be potential for volatility in

equity markets in the coming year.

A 20% (30 June 2020: 20%) increase in the market prices of equity-related investments as at 30

June 2021 would have increased the net assets attributable to holders of redeemable participating

preference shares by £63,896,286 (30 June 2020: £48,419,953) and a 20% change in the opposite

direction would have decreased the net assets attributable to holders of redeemable participating

preference shares by an equal opposite amount.

A sensitivity analysis based on the interest rates of bond-related investments as at 30 June 2021

has been considered under Interest rate risk on pages 110 to 111.

Actual trading results may differ from the above sensitivity analysis and these differences could be

material.

Foreign currency risk

Foreign currency risk arises from fluctuations in the value of a foreign currency. It represents the

potential loss the Company may suffer though holding foreign currency assets in the face of foreign

exchange movements.

As a portion of the Company’s investment portfolio is invested in securities denominated in

currencies other than pound sterling (the functional and presentation currency of the Company),

the Statement of Financial Position may be significantly affected by movements in the exchange

rates of such currencies against pound sterling. The Investment Manager has the power to manage

exposure to currency movements by using options, warrants and/or forward foreign currency

contracts and details of the holdings of such instruments at the date of these Financial Statements

is set out below and on the following page. In the event that the base currency weakens during the

course of the contract, the contract will expire at a loss that will be offset by a corresponding gain

in the underlying assets. The opposite would be true when the base currency strengthens during

the course of the contract.

As at 30 June 2021, the Company had seven (30 June 2020: three) open forward foreign currency

contracts.

Forward foreign exchange contracts at 30 June 2021

Notional amounts

of contracts Fair value

Expiry date Underlying outstanding assets/(liabilities) £

16 July 2021 Foreign currency (sale of USD) US$142,401,785 (1,923,429)

16 July 2021 Foreign currency (sale of JPY) ¥7,652,532,853 (493,080)

16 July 2021 Foreign currency (sale of EUR) €8,261,673 30,532

16 July 2021 Foreign currency (sale of EUR) €2,692,488 (486)

16 July 2021 Foreign currency (purchase of USD) US$13,994,613 54,922

16 July 2021 Foreign currency (purchase of USD) US$48,407,172 184,569

16 July 2021 Foreign currency (purchase of JPY) ¥524,690,140 (11,170)

(2,158,142)

Forward foreign exchange contracts at 30 June 2020

Notional amounts

of contracts Fair value

Expiry date Underlying outstanding liabilities £

11 Sep 2020 Foreign currency (sale of USD) US$152,000,000 (3,240,867)

11 Sep 2020 Foreign currency (sale of USD) US$10,000,000 (113,864)

11 Sep 2020 Foreign currency (sale of JPY) ¥1,200,000,000 (186,988)

(3,541,719)

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The Company’s treatment of currency transactions other than in pound sterling is set out in note 2

to the Financial Statements under ‘Translation of foreign currency.’

As at 30 June 2021 and 30 June 2020, the Company held the following assets and liabilities in

currencies other than the functional currency, excluding the impact of forward foreign exchange

contracts disclosed above.

30 June 21 30 June 21 30 June 20 30 June 20

assets £ liabilities £ assets £ liabilities £

Australian dollar – – 5,435,872 –

Euro 26,126,214 – 11,739,650 –

Hong Kong dollar 2,622,878 – 1,494,871 –

Yen 50,120,395 – 38,350,207 –

Norwegian krone 6,835,006 – – –

Singapore dollar 1,451,223 – – –

US dollar 105,514,558 – 157,276,696 –

Total 192,710,274 – 214,297,296 –

Foreign currency sensitivity

As at 30 June 2021, if foreign exchange rates had weakened 10% (30 June 2020: 10%) against

pound sterling with all other variables held constant, net assets attributable to holders of

redeemable participating preference shares would be £7,909,284 (30 June 2020: £7,474,679)

lower, net of open forward foreign currency contracts and due mainly as a result of foreign

currency losses on translation of these financial assets and liabilities to pound sterling; and a 10%

strengthening of foreign exchange rates against pound sterling would have resulted in an equal but

opposite effect on the net assets attributable to holders of redeemable participating preference

shares. The sensitivity rate of 10% is regarded as reasonable as this approximates to the average

volatility of the principal foreign currencies to which the Company is exposed against Pound

Sterling. Any changes in the foreign exchange rate will directly affect the profit and loss, allocated

to the capital column of the Statement of Comprehensive Income.

Actual trading results may differ from the above sensitivity analysis and these differences could be

material.

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As has been seen in previous years currencies can fluctuate by more or less than this indicative

amount. The Investment Manager will incorporate this variable into risk analysis when managing

the investments.

Interest rate risk

Interest rate risk represents the uncertainty of investment return due to changes in the market

rates of interest.

The Company invests in fixed and floating rate securities. The income of the Company may be

affected by changes to interest rates relevant to particular securities or as a result of the

Investment Manager being unable to secure similar returns on the expiry of contracts or sale of

securities. Interest receivable on bank deposits or payable on the bank overdraft positions will be

affected by fluctuations in interest rates.

The Investment Manager actively manages the Company’s exposure to interest rate risk, paying

heed to prevailing interest rates and economic conditions, market expectations and their own

opinions of likely movements in interest rates. Currently the vast majority of the exposure of the

Company to fixed interest securities is in the form of index-linked bonds. The value of these

investments is determined by current and expected inflation and interest rates.

The value of fixed interest securities will be affected by general changes in interest rates that will in

turn result in increases or decreases in the market value of those instruments. When interest rates

decline, the value of the Company’s investments in fixed rate debt obligations can be expected to

rise, and when interest rates rise, the value of those investments may decline.

The investment portfolio details the security type, issuer, interest rate, and maturity date of all of

the Company’s fixed and floating rate securities as at 30 June 2021.

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The following tables summarise the Company’s exposure to interest rate risk. It includes the

Company’s financial assets and liabilities at fair values, categorised by underlying interest rate

type.

As at 30 June 2021

Non-interest

Floating rate £ Fixed rate £ bearing £ Total £

Financial assets

Investments at fair value through

profit or loss 7,960,943 189,318,128 319,481,429 516,760,500

Cash and cash equivalents 55,833,380 – – 55,833,380

Derivative financial assets – – 270,023 270,023

Trade and other receivables – – 6,004,238 6,004,238

63,794,323 189,318,128 325,755,690 578,868,141

Financial liabilities

Derivative financial liabilities – – 2,428,165 2,428,165

Trade and other payables – – 595,622 595,622

– – 3,023,787 3,023,787

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As at 30 June 2020

Non-interest

Floating rate £ Fixed rate £ bearing £ Total £

Financial assets

Investments at fair value through

profit or loss – 158,897,275 242,099,767 400,997,042

Cash and cash equivalents 42,667,336 – – 42,667,336

Trade and other receivables – – 8,869,483 8,869,483

42,667,336 158,897,275 250,969,250 448,133,861

Financial liabilities

Derivative financial liabilities – – 3,541,719 3,541,719

Trade and other payables – – 4,887,485 4,887,485

– – 8,429,204 8,429,204

The table below summarises weighted average effective (real) interest rates for fixed rate financial

instruments.

Weighted Weighted

average period average period

for which rate/ for which rate/

yield is fixed yield is fixed

30 June 21 % (years) 30 June 20 % (years)

UK government bonds -2.1118 22.76 -1.6905 31.97

US government bonds -2.4929 1.37 -0.4739 16.49

Japanese government bonds -0.2894 5.69 0.1447 6.69

Interest rate sensitivity analysis

An increase of 50 basis points (30 June 2020: 50 basis points) in interest rates as at the reporting

date would have decreased the net assets attributable to holders of redeemable participating

preference shares by £17,823,385 (30 June 2020: £16,079,980) and a decrease of 10 basis points

(30 June 2020: 10 basis points) in interest rates would have increased the net assets attributable to

holders of redeemable participating preference shares by £3,564,677 (30 June 2020: £3,215,996).

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Key determinants of interest rates include economic growth prospects, inflation, governments’

fiscal positions and rates on nominal bonds of similar maturities. This sensitivity analysis assumes

a 50 basis point increase and a 10 basis point decrease in interest rates (30 June 2020: 50 basis

point increase or 10 basis point decrease), with all other variables unchanged. This would be the

equivalent of a 50 basis point increase and 10 basis point decreases in ‘real’ interest rates and as

such is likely to overstate the actual impact of such a move in nominal rates. The reduced interest

sensitivity rates in the current year are regarded as reasonable due to the lower interest rate

environment as a result of effect of the covid-19 pandemic on national economies.

As most of the Company’s fixed rate securities are index-linked bonds, their yields, and as a

consequence their prices, are determined by market perception as to the appropriate level of yields

given the economic background.

This analysis does not allow for the impact of investments held within Ruffer Protection Strategies

which may reduce the sensitivity to changes in interest rates. See derivatives comment below.

Credit risk

Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a

commitment that it has entered into with the Company. Failure of any relevant counterparty to

perform its obligations in respect of these items may lead to a financial loss.

The Company is exposed to credit risk in respect of cash and cash equivalents and trade and other

receivables. The credit risk associated with debtors is limited to the unrealised gains on open

derivative contracts such as forward foreign currency contracts, as detailed above and trade and

other receivables. It is the opinion of the Board of Directors that the carrying amounts of these

financial assets represent the maximum credit risk exposure as at the reporting date.

The Company will not invest in the securities of any company that is not quoted or does not have a

listing on a market specified in the Financial Services and Markets Act 2000 (Financial

Promotions) Order 2001 except for investments in investment funds and such other financial

markets as may be specifically agreed from time to time between the Board and the Investment

Manager.

All transactions in listed securities are settled/paid upon delivery using approved brokers. The risk

of default is considered minimal, as delivery of securities sold is only made once the broker has

received payment. Payment is made on a purchase once the securities have been received by the

broker. The trade will fail if either party fails to meet their obligation.

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The Placing and Offer for Subscription document allows investment in a wide universe of equity

related securities and bonds, including those in countries that may be classed as emerging or

developing. In adhering to investment restrictions set out within the document, the Company

mitigates the risk of any significant concentration of credit risk.

Credit risk analysis

The Company’s maximum credit exposure is limited to the carrying amount of financial assets

recognised at the reporting date, as summarised below.

30 June 21 £ 30 June 20 £

Financial assets at fair value through profit or loss 516,760,500 400,997,042

Derivative assets at fair value through profit or loss 270,023 –

Cash and cash equivalents 55,833,380 42,667,336

Trade and other receivables 6,004,238 8,869,483

578,868,141 452,533,861

The Company is exposed to material credit risk in respect of cash and cash equivalents.

Substantially, all cash is placed with Northern Trust (Guernsey) Limited (NTGL).

NTGL is a wholly owned subsidiary of The Northern Trust Corporation (TNTC). TNTC is publicly

traded and a constituent of the S&P 500. TNTC has a long-term credit rating of A+ (30 June 2020:

A+) from Standard & Poor’s and A2 (30 June 2020: A2) from Moody’s.

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The Moody’s credit ratings of the issuers of Bonds held by the Company as at 30 June 2021 were as

follows.

30 June 21 30 June 20

UK gilt 3.75% 07/09/2021 Aa3 Aa2

UK index-linked gilt 1.875% 22/11/2022 Aa3 Aa2

UK gilt 0.125% 31/01/2023 Aa3 –

UK index-linked gilt 0.375% 22/03/2062 Aa3 Aa2

UK index-linked gilt 0.125% 22/11/2065 Aa3 –

UK index-linked gilt 0.125% 22/03/2068 Aa3 Aa2

US Treasury floating rate bond 31/10/2021 Aaa –

US Treasury inflation indexed bond 0.125% 15/04/2022 Aaa –

US Treasury inflation indexed bond 0.625% 15/04/2023 Aaa –

Japanese government index-linked bond 0.10% 10/03/2026 A1 Aaa

Japanese government index-linked bond 0.10% 10/03/2027 A1 Aaa

Japanese government index-linked bond 0.10% 10/03/2028 A1 Aaa

None of the Company’s financial assets is secured by collateral or other credit enhancements.

Derivatives

The Company has gained exposure to derivative contracts (predominantly options and forward

currency contracts) as a risk management tool. The intention of using such derivative contracts has

been primarily to minimise the exposure of the Company to the negative impact of changes to

foreign exchange rates, interest rates, market volatility and to protect the portfolio from a

correlated fall in bonds and equities. At the year end, all such instruments (except forward foreign

exchange contracts) were held within the Ruffer Protection Strategies vehicle as detailed in the

Portfolio Statement on page 123.

Fair value

Financial assets at fair value through profit or loss are carried at fair value. Other assets and

liabilities are carried at cost which approximates fair value.

IFRS 7 requires the Company to classify a fair value hierarchy that reflects the significance of the

inputs used in making the measurements. IFRS 7 establishes a fair value hierarchy that prioritises

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the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1

measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three

levels of the fair value hierarchy under IFRS 7 are as follows –

Level 1: Quoted prices, based on bid prices, (unadjusted) in active markets for identical assets or

liabilities

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability either directly (that is, as prices) or indirectly (that is, derived from prices) and

Level 3: Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its

entirety is determined on the basis of the lowest level input that is significant to the fair value

measurement in its entirety. For this purpose, the significance of an input is assessed against the

fair value measurement in its entirety. If a fair value measurement uses observable inputs that

require significant adjustment based on unobservable inputs, that measurement is a Level 3

measurement. Assessing the significance of a particular input to the fair value measurement in its

entirety requires judgment, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgment by the Company.

The Company considers observable data to be that market data that is readily available, regularly

distributed or updated, reliable and verifiable, not proprietary, and provided by independent

sources that are actively involved in the relevant market.

Assets classified in Level 1 consist of listed or quoted equities or equity related securities, options

and bonds which are issued by corporate issuers, supra-nationals or government organisations.

Assets classified in Level 2 are investments in funds fair-valued using the official NAV of each fund

as reported by each fund’s independent administrator at the reporting date. Where these funds are

invested in equity type products, they are classified as equity in the table above. Options and

foreign exchange forward contracts are fair valued using publicly available data. Foreign exchange

forward contracts are shown as derivative financial assets and liabilities in the above table.

Assets classified in Level 3 consist of investments for which no market exists for trading, for

example investments in liquidating or illiquid funds, and are reported using the latest available

official NAV less dividends declared to date of each fund as reported by each fund’s independent

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administrator at the last reporting date. Where a market exists for trading in illiquid funds, these

are classified in Level 2.

The following table presents the Company’s financial assets and liabilities by level within the

valuation hierarchy at 30 June 2021.

30 June 21

Level 1 £ Level 2 £ Level 3 £ total £

Financial assets at fair value through

profit or loss

Non-UK index-linked bonds 41,542,448 – – 41,542,448

Long-dated index-linked gilts 74,198,934 – – 74,198,934

Short-dated index-linked gilts 32,385,876 32,385,876

Short-dated bonds 49,151,813 – – 49,151,813

Illiquid strategies and options – 42,932,196 – 42,932,196

Gold and gold equities 16,580,977 21,602,768 – 38,183,745

Equities 216,879,396 21,486,092 – 238,365,488

Derivative financial assets – 270,023 – 270,023

Total assets 430,739,444 86,291,079 – 517,030,523

Financial liabilities at fair value through

profit or loss

Derivative financial liabilities – 2,428,165 – 2,428,165

Total liabilities – 2,428,165 – 2,428,165

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The following table presents the Company’s financial assets and liabilities by level within the

valuation hierarchy at 30 June 2020.

30 June 20

Level 1 £ Level 2 £ Level 3 £ total £

Financial assets at fair value through

profit or loss

Non-UK index-linked bonds 95,722,858 – – 95,722,858

Long-dated index-linked gilts 44,790,755 – – 44,790,755

Short-dated index-linked gilts 18,383,662 – – 18,383,662

Illiquid strategies and options – 57,608,234 – 57,608,234

Gold and gold equities 33,486,247 18,068,245 – 51,554,492

Equities 115,865,893 15,477,398 1,593,750 132,937,041

Total assets 308,249,415 91,153,877 1,593,750 400,997,042

Financial liabilities at fair value through

profit or loss

Derivative financial liabilities – 3,541,719 – 3,541,719

Total liabilities – 3,541,719 – 3,541,719

The Company recognises transfers between levels of fair value hierarchy as of the end of the

reporting year during which the transfer has occurred. During the years ended 30 June 2021 and

30 June 2020, there were no transfers between levels of fair value hierarchy.

The movements in Level 3 investments during the year were as follows.

Year ended Year ended

30 June 21 £ 30 June 20 £

Opening valuation 1,593,750 1,593,750

Liquidation distribution received (1,809,375) –

Realised gain 215,625 –

Closing valuation – 1,593,750

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During the year, the liquidators of Renn Universal Growth Investment Trust, the Company’s sole

Level 3 investment, made a third liquidation distribution to shareholders of £1.93 per share. There

is a chance of a further small residual payment, but of an unknown amount at an unknown date in

the future, as a result of which no value has been ascribed to this investment at 30 June 2021.

Liquidity risk

Liquidity risk is the risk that the Company will find it difficult or impossible to realise assets or

otherwise raising funds to meet financial commitments. The Company’s liquidity risk is managed

by the Investment Manager who monitors the cash positions on a regular basis. The Company’s

overall liquidity risks are monitored on a regular basis by the Board of Directors and a formal

report is made by the Investment Manager to the Directors at each Board Meeting.

As at 30 June 2021 and 30 June 2020, the Company had no significant financial liabilities other

than short-term payables arising directly from investing activity and derivative financial liabilities

used to minimise the Company’s foreign currency exposure.

20 Capital risk management

The fair value of the Company’s financial assets and liabilities approximate to their carrying

amounts at the reporting date. For the purposes of this disclosure, redeemable participating

preference shares are considered to be capital.

The Company’s objectives when managing capital are to safeguard the Company’s ability to

continue as a going concern and be viable in order to pursue its investment objectives. The Board

regularly reviews the Company’s capital structure, including gearing levels. It also decides the

extent to which any return of capital or income may be made to shareholders by way of dividends

or share repurchases. It is the Board’s intention to increase the market capitalisation of the

Company not only through capital gain on the portfolio but also through further issuance of shares

when demand permits and the shares are trading at a sufficient premium to NAV per share.

The Company has the ability to borrow up to 30% of its NAV at any time for short-term or

temporary purposes as is necessary for the settlement of transactions, to facilitate redemption

(where applicable) or to meet ongoing expenses. At the year end the Company had no borrowings

(30 June 2020: Nil). The Company does not have, nor does it intend to adopt, any structural

gearing. The gearing ratio below is calculated as total liabilities divided by total equity.

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30 June 21 £ 30 June 20 £

Total assets 578,875,120 452,541,585

Less: total liabilities (3,023,787) (8,429,204)

Total equity 575,851,333 444,112,381

Gearing ratio 0.53% 1.90%

The Board considers this gearing ratio to be adequate since total liabilities above refer only to trade

and other payables and unrealised losses on open spot and forward foreign currency contracts and

which represents less than 1% (2020: less than 2%) of the Company’s total assets.

Redemption Facility

In addition to the Company having the authority to purchase shares when deemed appropriate by

the Directors, the Company has a Redemption Facility (which takes the form of a tender offer to all

holders of redeemable participating preference shares). This facility may operate annually, in

November each year, at the discretion of the Directors. Redemptions on any Redemption Date may

be restricted to a maximum of 25% in aggregate of the Shares then in issue, with any tender

requests from shareholders in excess of this being scaled back pro rata.

The facility is intended, together with share buybacks, to address any imbalance in the supply and

demand for the shares and to assist in maintaining a narrow discount to the NAV per Share at

which the shares may be trading.

Purchase of own shares by the Company

A special resolution was passed on 4 December 2020 which authorised the Company, in

accordance with The Companies (Guernsey) Law, 2008, to make purchases of its own shares as

defined in that Ordinance of its redeemable participating preference shares of 0.01p each,

provided that

i the maximum number of shares the Company can purchase is no more than 14.99% of the

Company’s issued share capital

ii the minimum price (exclusive of expenses) which may be paid for a share is 0.01 pence,

being the nominal value per share

iii the maximum price (exclusive of expenses) which may be paid for the share is an amount

equal to the higher of (i) 105% of the average of the middle market quotations for a share

taken from the London Stock Exchange Daily Official List for the five business days

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immediately preceding the day on which the Share is purchased and (ii) the price stipulated

in Article 5(i) of the Buy back and Stabilisation Regulation (No 2237 of 2003)

iv acquisitions may only be made pursuant to this authority if the shares are (at the date of the

proposed purchase) trading on the London Stock Exchange at a discount to the lower of the

undiluted or diluted NAV

v the authority conferred shall expire at the conclusion of the AGM of the Company in 2020

or, if earlier, on the expiry of 15 months from the passing of this resolution, unless such

authority is renewed prior to such time and

vi the Company may make a contract to purchase shares under the authority hereby conferred

prior to the expiry of such authority which will or may be executed wholly or partly after the

expiration of such authority and may make a purchase of Shares pursuant to any such

contract. No such repurchases of shares were made during the year (30 June 2020: Nil).

21 Subsequent events

These Financial Statements were approved for issuance by the Board on 5 October 2021.

Subsequent events have been evaluated up until this date.

Subsequent to the year end, the Company has announced tap issues totalling 14,695,000

redeemable participating preference shares at an average issue price of £2.8634 per share.

At an EGM held on 27 September 2021, a resolution was approved by shareholders empowering

the Directors to issue a further 21,684,841 redeemable participating preference shares, being 10%

of the equity securities in issue at the latest practicable date prior to the EGM notice.

A second interim dividend of 1.55 pence per share in respect of the year ended 30 June 2021 was

declared on 5 October 2021. The dividend is payable on 29 October 2021 to shareholders on record

at 15 October 2021.

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120

Holding at % of total

Currency 30 June 21 Fair value £ net assets

Government bonds 34.27%

(30 Jun 20: 35.78%)

Non-UK index-linked bonds

Japanese index linked bond 10/03/2026 JPY 350,000,000 2,360,535 0.41

Japanese index linked bond 10/03/2027 JPY 350,000,000 2,373,286 0.41

Japanese index linked bond 10/03/2028 JPY 350,000,000 2,356,737 0.41

US Treasury inflation indexed bond 0.125% 15/04/2022 USD 18,000,000 14,652,159 2.55

US Treasury inflation indexed bond 0.625% 15/04/2023 USD 24,100,000 19,799,732 3.44

Total non-UK index-linked bonds 41,542,449 7.22

Long-dated index-linked gilts

UK index-linked gilt 0.375% 22/03/2062 GBP 6,050,000 19,488,142 3.38

UK index-linked gilt 0.125% 22/11/2065 GBP 8,100,000 24,153,776 4.20

UK index-linked gilt 0.125% 22/03/2068 GBP 9,100,000 30,557,016 5.31

Total long-dated index-linked gilts 74,198,934 12.89

Short-dated index-linked gilts

UK index-linked gilt 1.875% 22/11/2022 GBP 20,500,000 32,385,876 5.62

Total short-dated index-linked gilts 32,385,876 5.62

Short-dated bonds

UK gilt 3.75% 07/09/2021 GBP 26,000,000 26,176,020 4.55

US Treasury floating rate bond 31/10/2021 USD 11,000,000 7,960,943 1.38

UK gilt 0.125% 31/01/2023 GBP 15,000,000 15,014,850 2.61

Total short-dated bonds 49,151,813 8.54

Total government bonds 197,279,072 34.27

Equities 41.40% (30 Jun 20: 29.93%)

Europe

Aena SME EUR 26,000 3,079,798 0.54

Banco Santander EUR 1,850,000 5,105,061 0.89

Bank of Ireland Group EUR 800,000 3,097,283 0.54

Europcar Mobility Group EUR 8,500,000 3,473,729 0.60

Equinor NOK 260,000 3,979,231 0.69

Fresenius Medical Care EUR 50,000 3,006,771 0.52

Koninkliijke Vopak EUR 60,000 1,969,144 0.34

Unicredito EUR 360,000 3,069,272 0.53

Vinci EUR 22,000 1,696,717 0.30

Volkswagen EUR 9,000 1,628,439 0.28

Yara International NOK 75,000 2,855,775 0.50

Total Europe equities 32,961,220 5.73

Portfolio statementas at 30 June 2021

Holding at % of total

Currency 30 June 21 Fair value £ net assets

United Kingdom

Bae Systems GBP 400,000 2,088,000 0.36

Barclays GBP 2,200,000 3,764,640 0.65

Belvoir Lettings GBP 500,000 1,200,000 0.21

BP GBP 3,500,000 11,025,000 1.91

Breedon Group GBP 1,200,000 1,293,600 0.22

BT Group GBP 1,300,000 2,521,350 0.44

Countryside Properties GBP 1,050,206 4,963,274 0.86

Glaxosmithkline GBP 500,000 7,097,000 1.23

Glencore International GBP 1,000,000 3,094,000 0.54

Grit Real Estate GBP 1,626,850 715,814 0.12

Hipgnosis Songs Fund GBP 1,400,000 1,702,400 0.30

Lloyds Banking Group GBP 31,776,800 14,836,588 2.58

Marks & Spencer Group GBP 1,200,000 1,757,400 0.31

Melrose Industries GBP 1,600,000 2,480,000 0.43

Natwest Group GBP 4,509,790 9,159,383 1.59

PRS Real Estate Investment Trust GBP 1,350,000 1,377,000 0.24

Renn Universal Growth Trust GBP 937,500 0 0.00

Royal Dutch Shell B GBP 800,000 11,192,000 1.95

Ruffer SICAV UK Mid & Smaller Companies Fund* GBP 73,147 21,486,092 3.73

Taylor Maritime Investments GBP 3,600,000 2,736,000 0.48

Tesco GBP 3,050,000 6,798,450 1.18

Trident Royalties GBP 4,117,647 1,523,529 0.26

Tufton Oceanic Assets USD 3,348,400 2,759,870 0.48

Total UK equities 115,571,390 20.07

North America

Alexion Pharmaceuticals USD 29,000 3,850,452 0.67

American Express USD 15,000 1,792,061 0.31

Bristol Myers Squibb CVR USD 144,000 6,953,771 1.21

Cabot Oil & Gas USD 150,000 1,893,572 0.33

Centene USD 140,000 7,379,076 1.28

Chesapeake Energy USD 70,000 2,626,202 0.46

Cigna USD 38,000 6,513,383 1.13

Ehealth USD 60,000 2,533,439 0.44

General Motors USD 56,000 2,395,720 0.42

Northrop Grumman USD 7,000 1,838,999 0.32

Total North America equities 37,776,675 6.57121

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Holding at % of total

Currency 30 June 21 Fair value £ net assets

Japan

Central Glass JPY 13,000 179,700 0.03

Dena JPY 28,600 438,895 0.08

Fuji Electric JPY 65,000 2,191,258 0.38

Fuji Media JPY 34,600 277,870 0.05

Fujitec JPY 18,900 302,954 0.05

Fujitsu JPY 24,000 3,241,787 0.56

Japan Petroleum Exploration JPY 10,800 140,293 0.02

Kato Sangyo JPY 17,900 393,750 0.07

Koito Manufacturing JPY 6,500 291,886 0.05

Mitsubishi Electric JPY 280,000 2,938,382 0.51

Mitsubishi Heavy Industries JPY 100,000 2,127,480 0.37

NEC JPY 78,000 2,903,629 0.51

Nippo JPY 13,500 277,633 0.05

Nippon Seiki JPY 35,500 273,777 0.05

Nippon Television JPY 22,300 186,491 0.03

Nissan Shatai JPY 55,800 260,378 0.05

Nomura Real Estate JPY 250,000 4,583,289 0.80

Orix JPY 370,000 4,512,548 0.78

Rakuten Group JPY 320,000 2,609,465 0.45

Sekisui Jushi JPY 8,800 120,784 0.02

Shin-Etsu Polymer JPY 33,100 221,017 0.04

Sony JPY 37,000 2,600,614 0.45

Sumitomo Mitsui Financial Group JPY 220,000 5,483,678 0.95

Tachi-S JPY 43,200 417,785 0.07

Teikoku Sen-I JPY 26,900 366,239 0.06

Toagosei JPY 31,600 231,978 0.04

Toei Animation JPY 6,500 555,852 0.10

Toei JPY 2,000 270,084 0.05

Token JPY 4,400 290,363 0.05

Tokio Marine JPY 77,000 2,559,718 0.44

Tokyo Broadcasting System JPY 17,400 193,187 0.03

Toppan Forms JPY 26,800 188,718 0.03

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Holding at % of total

Currency 30 June 21 Fair value £ net assets

Torii Pharmaceutical JPY 9,700 153,338 0.03

Toyota JPY 5,100 318,966 0.06

TS Tech JPY 20,000 223,226 0.04

TV Asahi JPY 15,900 182,121 0.03

Total Japan equities 42,509,133 7.38

Asia (ex-Japan)

Weiss Korea Opportunity Fund GBP 800,000 2,144,000 0.37

Wilmar International SGD 600,000 1,451,223 0.25

Total Asia (ex-Japan) equities 3,595,223 0.62

Other equities

Ambev USD 2,400,000 5,951,847 1.03

Total other equities 5,951,847 1.03

Total equities 238,365,488 41.40

Gold and gold equities 6.62% (30 Jun 20: 11.61%)

AngloGold Ashanti USD 120,000,000 1,612,031 0.27

IAmGold USD 1,200,000 2,550,792 0.44

Ishares Physical Gold USD 220,000 5,480,912 0.95

Kinross Gold USD 1,060,000 4,866,604 0.85

LF Ruffer Gold Fund*† GBP 7,676,617 21,602,768 3.75

Wheaton Precious Metals USD 65,000 2,070,638 0.36

Total gold and gold equities 38,183,745 6.62

Illiquid strategies and options 7.45% (30 Jun 20: 12.97%)

Ruffer Illiquid Multi Strategies Fund 2015* GBP 29,930,171 24,443,760 4.24

Ruffer Protection Strategies International* GBP 5,935,102 18,488,436 3.21

Total illiquid strategies and options 42,932,196 7.45

Total investments 516,760,500 89.74

Cash and other net current assets 59,090,833 10.26

575,851,333 100.00

* Ruffer Protection Strategies International and Ruffer Illiquid Multi Strategies Fund 2015 Ltd are classed as related parties as they share the same Investment

Manager (Ruffer AIFM Limited) as the Company. LF Ruffer Gold Fund and Ruffer SICAV UK Mid & Smaller Companies Fund are also classed as related parties as

their investment manager (Ruffer LLP) is the parent of the Company’s Investment Manager.

† No management fee is charged by Ruffer AIFM Limited on this investment.

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Ruffer Investment Company Limited was incorporated in Guernsey as a company limited by

shares and as an authorised closed-ended investment company on 1 June 2004. The Company

launched on the London Stock Exchange on 8 July 2004, with a launch price of 100p per share and

an initial net asset value of 98p per share. The principal objective of the Company is to achieve a

positive total annual return, after all expenses, of at least twice the Bank of England base rate. The

Company invests predominantly in internationally listed or quoted equities or equity related

securities (including convertibles) and/or bonds which are issued by corporate issuers, supra-

nationals or government organisations.

The Company’s redeemable participating preference shares are listed on the London Stock

Exchange.

The Company reports its audited annual results each year for the year ended 30 June, and its

unaudited interim results for the six months ended 31 December. These Financial Statements were

authorised for issue on 5 October 2021 by the Directors.

The Investment Manager is authorised and regulated by the United Kingdom Financial Conduct

Authority as a full-scope Alternative Investment Fund Manager (AIFM). The Investment Manager

is entitled to an investment management fee payable to the AIFM monthly in arrears at a rate of

1% of the Net Asset Value per annum.

The Investment Manager and the Board intend to conduct the affairs of the Company so as to

ensure that it will not become resident in the United Kingdom. Accordingly, and provided that the

Company does not carry on a trade in the United Kingdom through a branch or agency situated

therein, the Company will not be subject to United Kingdom Corporation Tax or Income Tax.

The Company intends to be operated in such a manner that its shares are not categorised as non-

mainstream pooled investments. Among other things, this requires the Company to pay dividends

totalling in excess of 85% of any net income that it receives or is deemed to receive for UK tax

purposes on an annual basis so that it would qualify as an investment trust if it were UK tax-

resident.

Praxis Fund Services Limited (the ‘Administrator’) is entitled to receive an annual fee equal to

0.08%. per annum on the first £100 million; 0.04%. per annum between £100 million and

£200 million; 0.02%. per annum between £200 million and £300 million; and 0.015%. per annum

thereafter; based on the NAV of the Company on a mid-market basis, subject to a minimum fee of

£100,000 per annum.

General information

Northern Trust (Guernsey) Limited (the ‘Custodian’) is entitled to receive from the Company a fee

of £2,000 per annum. The Custodian is also entitled to charge for certain expenses incurred by it

in connection with its duties.

Northern Trust (Guernsey) Limited (the ‘Depositary’) is entitled to an annual Depositary fee

payable monthly in arrears at a rate of 0.01% of the Net Asset Value of the Company up to

£100 million, 0.008% on the next £100 million and 0.006% thereafter as at the last business day

of the month subject to a minimum fee of £20,000 per annum.

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Directors

Christopher Russell

Jill May

David Staples

Shelagh Mason

Ashe Windham (retired 4 December 2020)

Nicholas Pink (appointed 1 September 2020)

Registered Office

Sarnia House

Le Truchot

St Peter Port

Guernsey GY1 1GR

Independent Auditor

Deloitte LLP

Regency Court

Glategny Esplanade

St Peter Port

Guernsey GY1 3HW

Investment Manager and Alternative

Investment Fund Manager

Ruffer AIFM Limited

80 Victoria Street

London SW1E 5JL

Solicitors to the Company

as to UK law

Gowling WLG

4 More London Riverside

London SE1 2AU

CREST Agent

Computershare Investor Services (Jersey)

Limited

Queensway House

Hilgrove Street

St Helier

Jersey JE1 1ES

Company Secretary and Administrator

Praxis Fund Services Limited

Sarnia House

Le Truchot

St Peter Port

Guernsey GY1 1GR

Sponsor and broker

Investec Bank plc

30 Gresham Street

London EC2V 7QP

Custodian

Northern Trust (Guernsey) Limited

Trafalgar Court, Les Banques

St Peter Port

Guernsey GY1 3DA

Depositary

Northern Trust (Guernsey) Limited

Trafalgar Court, Les Banques

St Peter Port

Guernsey GY1 3DA

Advocates to the Company

as to Guernsey law

Mourant Ozannes (Guernsey) LLP

Royal Chambers

St Julian’s Avenue

St Peter Port

Guernsey GY1 4HP

Management and administration

Regulatory performance data

To 31 Dec % †2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

RIC NAV TR 8.9 14.0 0.1 6.0 23.8 15.1 16.5 0.7 3.4 9.5

FTSE All-Share TR 12.3 22.0 16.8 5.3 -29.9 30.1 14.5 -3.5 12.3 20.8

Twice UK Bank Rate 9.9 9.4 11.0 11.2 3.4 1.0 1.0 1.0 1.0 1.0

2014 2015 2016 2017 2018 2019 2020 ‡2021 Annualised

1.8 -1.0 12.4 1.6 -6.0 8.4 13.5 8.3 7.9

1.2 1.0 16.8 13.1 -9.5 19.2 -9.8 12.3 7.5

1.0 1.0 1.0 0.5 1.0 1.5 0.5 0.1 3.8

† From July 2004

‡ To June 2021

Source: Ruffer, Thomson Datastream, FTSE International (FTSE)†. Please note that past performance is not a reliable indicator of future performance. The value of the

shares and the income from them can go down as well as up and you may not get back the full amount originally invested. The value of overseas investments will be

influenced by the rate of exchange. Calendar quarter data has been used up to the latest quarter end. Ruffer LLP is authorised and regulated by the Financial

Conduct Authority.

FTSE International Limited (FTSE) © FTSE 2021. FTSE® is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited

under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or

omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this

communication. No further distribution of FTSE Data is permitted without FTSE’s express written consent. FTSE does not promote, sponsor or endorse the content of

this communication.

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Appendix (unaudited)

128

Alternative performance measures used in the Annual Report

Total NAV/Share price return

Total NAV return and total share price return are calculations showing how the NAV/share price

per share has performed over a period of time, taking into account dividends paid to shareholders.

It is calculated on the assumption that dividends are reinvested at the prevailing NAV/share price

on the last day of the month that the shares first trade ex-dividend. This provides a useful measure

to allow shareholders to compare performances between investment funds where the dividend

paid may differ.

Total NAV Total share

Year ended 30 June 2021 return price return

Opening NAV/share price per share 245.81p 242.00p

Closing NAV/share price per share (a) 281.29p 287.00p

Dividends paid (b) 1.90p 1.90p

Weighted average NAV/share price per share on month

end ex-dividend (c) 259.61p 255.55p

Dividend adjustment factor (d = b/c + 1) (d) 1.0073 1.0073

Adjusted closing NAV/share price per share (e = a x d) (e) 283.38p 289.11p

Total NAV/share price return 15.3% 19.5%

Share premium/(discount) to NAV

Share premium or (discount) to NAV is the amount by which the share price is higher/lower than

the NAV per share, expressed as a percentage of the NAV per share, and provides a measure of the

Company’s share price relative to the NAV.

NAV per share

NAV per share is a calculation of the Company’s NAV divided by the number of shares in issue and

provides a measure of the value of each share in issue.

Market capitalisation

Market capitalisation is the value of a company that is traded on the stock market, calculated by

multiplying the total number of shares by the present share price.